CIHM 
Microfiche 
Series 
(l\/lonographs) 


ICI\/IH 

Collection  de 
microfiches 
(monographles) 


Canadian  Institute  for  Historical  Microreproductions  /  Institut  Canadian  de  microreproductions  historiques 


:  '^^T^m^'^m 


Technical  and  Bibliographic  Notes  /  Notes  techniques  at  bibliographique: 


The  Institute  has  attempted  to  obtain  the  best  original 
copy  available  for  filming.  Features  of  this  copy  which 
may  be  bibliographically  unique,  which  may  alter  any  of 
the  images  in  the  reproduction,  or  which  may 
significantly  change  the  usual  method  of  filming  are 
checked  below. 


D 
D 

D 

D 
D 

D 
D 
D 
D 
D 

D 


D 


Coloured  covers  / 
Couverture  de  couleur 

Covers  damaged  / 
Couverture  endommag^ 

Covers  restored  and/or  laminated  / 
Couverture  restaur^  et/ou  pellicul^e 

Cover  title  missing  /  Le  titre  de  couverture  manque 

Coloured  maps  /  Cartes  g6ographiques  en  couleur 

Coloured  ink  (i.e.  other  than  blue  or  black)  / 
Encre  de  couleur  (i.e.  autre  que  bleue  ou  noire) 

Coloured  plates  and/or  illustrations  / 
Planches  et/ou  illustrations  en  couleur 

Bound  with  other  material  / 
Reli6  avec  d'autres  documents 

Only  edition  available  / 
Seule  Edition  disponible 

Tight  binding  may  cause  shadows  or  distortion  along 
interior  margin  /  La  reliure  serree  peut  causer  de 
I'ombre  ou  de  la  distorsion  le  long  de  la  marge 
int^rieure. 

Blank  leaves  added  during  restorations  may  appear 
within  the  text.  Whenever  possible,  these  have  been 
omitted  from  filming  /  Use  peut  que  certaines  pages 
blanches  ajout^es  lors  d'une  restauration 
apparaissent  dans  le  texte,  mais,  lorsque  cela  ^tait 
possible,  ces  pages  n'ont  pas  ^t§  film^es. 

Additional  comments  / 
Commentaires  suppl^mentaires: 


L'Institut  a  microfilm^  le  meilleur  exemplaire  qu'il  lui  a 
6t6  possible  de  se  procurer.  Les  details  de  cet  exem- 
plaire qui  sont  peut-dtre  uniques  du  point  de  vue  bibli- 
ographique,  qui  peuvent  modifier  une  image  reproduite, 
ou  qui  peuvent  exiger  une  modification  dans  la  m6tho- 
de  normale  de  filmage  sont  indiqu^s  ci-dessous. 

I I   Coloured  pages  /  Pages  de  couleur 

I I    Pages  damaged  /  Pages  endommag6es 


D 


Pages  restored  and/or  laminated  / 
Pages  restaur^es  et/ou  pellicul^es 


Q  Pages  discoloured,  stained  or  foxed  / 
Pages  decolor^es,  tachet^es  ou  piqu^es 

I      I   Pages  detached  /  Pages  d6tach6es 

I  t/]   Showthrough  /  Transparence 

I      I   Quality  of  print  varies  / 


D 
D 


D 


Quality  in^gale  de  I'impression 

Includes  supplemental  material  / 
Comprend  du  materiel  supplementaire 

Pages  wholly  or  partially  obscured  by  errata  slips, 
tissues,  etc.,  have  been  refilmed  to  ensure  the  best 
possible  image  /  Les  pages  totalement  ou 
partiellement  obscurcies  par  un  feuillet  d'errata,  une 
pelure,  etc..  ont  et6  film6es  ^  nouveau  de  fagon  k 
obtenir  la  meilleure  image  possible. 

Opposing  pages  with  varying  colouration  or 
discotourations  are  filmed  twice  to  ensure  the  best 
possible  image  /  Les  pages  s'opposant  ayant  des 
colorations  variables  ou  des  decolorations  sont 
film6es  deux  fois  afin  d'obtenir  la  meilleure  image 
possible. 


This  item  is  filmed  at  the  reduction  ratio  checlced  below  / 

Ce  document  est  filmi  au  Uux  de  rMuctior  indiqui  ci-deaaou«. 


lOx 

14x 

18x 

22x 

26x 

30x 

1 

1 

J 

12x 


16x 


20x 


24x 


28x 


32x 


i 


Th«  copy  filmed  h«r«  hat  b««n  r«produc«d  thanks 
to  tha  ganarotity  of: 

National  Library  of  Canada 


L'axamplaira  film*  fut  raproduit  grica  i  la 
ginirosit*  da: 

Bibliotheque  nationale  du  Canada 


Tha  imagaa  appaaring  hara  ara  tha  bast  quality 
possibia  considaring  tha  condition  and  lagibility 
of  tha  original  copy  and  in  kaaping  with  tha 
filming  contract  spacificationa. 


Original  copias  in  printad  papor  covara  ara  fiimod 
beginning  with  tha  front  covar  and  anding  on 
tha  last  paga  with  a  printad  or  illuatratad  improa- 
sion.  or  tha  back  covar  whan  appropriate.  All 
othar  original  copiaa  ara  filmed  beginning  on  tha 
first  paga  with  a  printad  or  illustrated  impres- 
sion, and  anding  on  the  last  page  with  a  printad 
or  illuatratad  impression. 


The  last  recorded  frame  on  each  microfiche 
shall  contain  tha  symbol  — ^  (meaning  "CON- 
TINUED"), or  tha  symbol  V  (meaning  "END"), 
whichever  applies. 


Les  images  suivantas  ont  *t*  raproduites  avac  la 
plus  grand  soin.  compta  tanu  de  la  condition  at 
da  la  nettet*  de  I'exemplaire  film*,  at  an 
conformity  avac  les  conditions  du  contrat  da 
filmaga. 

Lea  axemplairas  originaux  dont  la  couvartura  en 
papier  eat  imprimte  sont  filmis  en  commanpant 
par  la  premier  plat  at  en  terminant  soit  par  la 
darniire  paga  qui  comporta  une  empreinte 
d'impression  ou  dlllustration,  soit  par  la  second 
plat,  salon  le  cas.  Tous  les  autres  axemplaires 
originaux  sont  filmis  en  commenpant  par  la 
premiire  page  qui  comporte  une  empreinte 
d'impreasion  ou  d'illustration  at  an  terminant  par 
la  darniire  page  qui  comporte  une  telle 
empreinte. 

Un  des  symboles  suivants  apparaitra  sur  la 
darniire  image  de  cheque  microfiche,  salon  le 
cas:  le  symbols  ^^  signifie  "A  SUIVRE",  la 
symbols  V  signifie  "FIN". 


Maps,  plates,  charts,  etc.,  may  be  filmed  at 
different  reduction  ratios.  Those  too  large  to  be 
entirely  included  in  one  exposure  are  filmed 
beginning  in  the  upper  left  hand  corner,  left  to 
right  and  top  to  bottom,  as  many  frames  as 
required.  The  following  diagrams  illustrate  the 
method: 


Les  cartea,  planches,  tableaux,  etc..  peuvent  etre 
filmis  i  des  taux  de  reduction  diffArents. 
Lorsque  le  document  est  trop  grand  pour  etre 
reproduit  en  un  seul  cliche,  il  est  films  d  partir 
de  Tangle  supirieur  gauche,  de  gauche  A  droite, 
at  de  haut  en  baa,  en  prenant  la  nombra 
d'imagas  nicessaire.  Las  diagrammes  suivants 
illustrent  la  m^thoda. 


1 

2 

3 

1      . 

2 

3 

4 

5 

6 

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/ 


THE   ENGLISH    RAILWAY 

com;^iission  of 


AM)  CANAL 

1 8t  i 


s.  J.  McLean 

AssociATF  l'Ri)n;.M.K  up  Economics,  i.Ei.ANi> 

StaNFOHU    JlNlOl,    U.MVIKSITY 


reprinted  from 

The  Quartehi.y  Journal  oi-  Economics 

Vol.  XX.,  November,  1905 


nvms:^^^^ 


THE  .  . 


Q-^Af^TEJ,,y  joru^^,;,    or  ECO^'O.mcS 


Pu' /i.s/ifif  /or  J/ir-  7.-,/  /•    • 


Is  fUiih!ish,;i  tor  H,r  n<i:   ■-  ,•„  • 

u-r!l.i„,,.rn:.;lr.;„{,.rs.  "■''""" ^  '^'""'   '"  »'^  ""e'U.on  0/ 

(  oinniiiniiiitiitni   I'm- H, .   .j, 

CONTENTS  FOR  AUGUST.   1905. 


III. 
IV. 


SUOaEST.ONS   ON    THE    THIiCRY    OK    VALUK 
THt     K,TABUSH.MnNT    OF    THE        r-.^  '        ' 

STANOAKO   ,N   THE    PHIU.^'ps  "'"""^^ 

VI.     THE    HIBERNIA    FIASCO      RECKNT    ^..1.  "^  Ch«t,r  Wh.tn.y  Wn^ht 

p-ss,A.  F,scus  TO  Ac,:,r/co:rT:r '"' 

-CENT  PUBLICATIONS  UPON   ECONOMICS 


'5    O   Virtue 

Wa.ttr  F    W.iicojt 
Ludwig  Kotany 


Fr«nci»  Walker 


CONTENTS   TOR    NOVEMBER    10ns 

'•     THE  ENGLISH  RAILWAY  AND  CAN.,  ^'"'^"ER,    1906. 

OF    ,888  '^'^'-  COMMISSION 


OF    rS  _ 
"•     TYPES  OF  AMERICAN  LABOR  UNIONS     THF  •,  n^, 

SHOREMEN   OF   .HE   OREAT   LaS      "'   '-""^ 
WAoL""^   ^^    -BOR-SAVINO    OEVICES    UPON 

IV.     EMPLOYERS'  ASSOCIATIONS    FOR    I.^-*,  ,.. 

LABOR    IN    THE   UNITED  STatL  '^"" 

NOTES   AND    MEMORANDA. 

Change,  in  the  Tax  Laws  of  New  V„rk  St.,, 
ihe  On^-n  of  the  Phrase  -Balance  of  t      ... 
KHCENT  PUBLICATIONS    UPON   economic" 


S.  J.  McLean 

John  R.  Commons 

Alvin  S.  .Johnson 

William  Frank:,:.  Wdloughby 

Frank  A.  Fetter 
W,  H.  Price 


.jraBt;?^;';  ^ 


THE 


QUARTERLY  JOURNAL 


or 


ECONOMICS 


AOVEMIiEJi,  1905 


THE  ENGLISH   RAILWAY  AND  CANAL  COM- 
MISSION  OF   1888. 

L 

While  the  law  providing  for  the  romraission  of  1873 
passed  both  Houses  of  ParUarnent  with  comparative  ease, 
and  received  but  little  opposition  from  the  railway  inier- 
est  the  l.tw  of  1888  developed  by  smal!  degrees,  and  met 
mut.  opposition.  The  report  of  the  Committee  of  1881 
had  stated  that  a  permanent  railway  tribunal  was  nec- 
essary.' Railway  Commission  legisla-  was  introduced 
regularly  between  1882  and  1886.  Ii  A5  the  nine  prin- 
cipal railways  submitted  bills  to  Parliament  embodying 
a  general  cla.ssification  and  a  rearrangement  of  their  max- 
imum rates.  But  the  protests  of  the  traders  led  to  the 
withdrawal  of  these  measures.  The  defeat  of  the  govern- 
ment in  1886  on  the  Irish  Que.stion  prevented  any  further 
action  at  that  time.  In  ld87  a  regulative  easure,  which 
in  some  respects  resembled  the  legislation  oi  the  following 
year,  passed  the  House  of  Lords. 

I  Report  of  Select  Committee  on  Railaai/i.  I  SSI,  P»rt  I.,  p.  Hi. 


.mw^! 


3 


wv.«7-m.-  joMAv,,.  Of  ecom«,cs 


same  iKwition  as  m.v  i..f    •  '""«'<"  "•••  to  Ih"  m  the 

thw,  Ihe  two  l„v  ,„!„■  *""  "  ""■"■''""hip  of 

on  thr  CommWon  arr  .00010,!  f     ^  '     """  "'"'  »™ 

Tho  old  p™vi,io„  whereby  ooerf^f.^  ■*""''''"''■"''"■■ 

w-  .0  ..  "of  exporienceV:,  way;  r:™ '3"'' 
tinue(  ;  and  Mr  Prim  th^      i  ""s'ness     was  con- 

o'her  lay  com„,is,i„ol'^ral  „o,  ^SZ     T""  "'  "" 
tioo  Sir  Krcderick  Pefi  wlT    f   .T"*''-    To  Ihi..  p„,i. 

was  appointp,!      Th^  la        "^'^^  Commission  in  1873, 
ment  thoy  wore  informo"  '  -n     K.^  "'  "^  ^^P"'"^" 

with  any  active  en^asoinent   i'l   „„,i     1'"        ''"^^^'^''^ 
f,iM"Hnr   in   political   controversies" 

-:i:  :::,.r::;'r.r  ■ "-  "•■  ■ ' "-  ■■■' "-  ■"-'  -. ». 

Si,;t'S  ~r:E  ™- S::;s  :-r=  r;—' s;:? 


1 


E\(!USH  RAlU\Ay   ASD  VASAL  I'OifMISSlOX         3 

Wl.il(.  the  juriwliction  Riven  by  the  \ct  of  IHHH  eni- 
hraces  u  variety  of  functions,  the  incmt  important  ,  which 
are  undue  preferetice,  facihties  for  traffic,  traffic  on  steam- 
boats, tbrou>:h  rutes,  rate-JM)ol{H,  t.-rminalH,  Icpility  of 
rates,  provisions  relatinR  to  private  branch  si. lings,  and 
referen.c.8  under  tt,(>  Hoard  of  Trade  Arbitrations  Act, 
1874,  ihe  most  important  matters  from  the  standpoint 
of  the  traders  are  (a)  terminals,  (6)  reasoiiable  faciiiti<  , 
(r)  through  rates,  (d)  mulw  preference,  (e)  control  over 
actual  rates. 

The  history  of  the  terminal  (|uestion  is  a  long  and  in- 
volved one.     When  the  earlier  railways  w, :     chartered, 
thr.   "canal   toll"   idea   i)revailed.     For  a   time  carriers, 
already  in  existence,  quoted  through  rates  over  the  rail- 
way lines,    making  such  arrangements  as  they   deemed 
prof)er  in  regard  to  payments  for  special  services  and  for 
station  terminals.     It  was  not  long,  however,  b<'fore  the 
radways  controlled   the  forwarding  business,  and  com- 
plamt  soon  aio.se.     The  railways  claimed  the  right,   in 
addition  to  the  powers  given  them  under  their  maxnnum 
rates,  to   make  charges  for  additional  services  and  for 
termmals.'    The  traders   contended    that  the  maximutn 
rates  covered  all  that  the  railways  were  legally  empowered 
to    collect.    It    was    concerning   the    station    terminals, 
however,  that  the  keenest  contention  existed.     The  Select 
Committee    of    1882    had    recommended    that    termin.i 
charges  should  be  recognized,  but  that  they  should  b. 
-.ubject  to  publication  by  the  companies,  and  that  in  case 
of  challenge  they  should  be  sanctioned  by  the  Railway 
Comnii.ssion.'    A  clause  to  this  effect  was  contained  in 
the  regulative  mea.sure  intro<luced  by  Mr.  Chamberlain 
in  1884.     In  a  decision  of  the  Court  of  Queen's   Bench 

„f  .k'^p^.T-'''''^-?'  terminals  ha«  come  up  In  the  United  State-      Th..  charter 
•.SV/frt  Comn„Ur,  on  Hniiway,.  ls«2,  pp.  v   and  ivii. 


4  QUARTERLY  JOURNAL  OF  ECONOMICS 

in  1885  the  right  of  the  railways  to  collect  terminals  was 
definitely  recognized/     But  the  traders  .!id  not  recognize 
this  decsmn  as  final;  for,  because  of  a  tochnical  condi- 
tion, It  was  impossible  to  carry  the  case  before  the  higher 
courts.     While  the  legislation  of  1888  was  in  committee 
various  attempts  were  made  to  place  the  control  of  ter- 
minals under  the  Railway  Commission,  as  well  as  to  pro- 
vide that  in  every  case  the  maximum  rates  should  include 
termina  s.    But  the  government  took  the  position  that 
terminals  were  legally  established,  and  so  they  were  given 
explicit  recognition.  ^ 

The  power  to  order  through  rat  s,  on  application,  which 
had  been  placed  in  the  Act  of  1873  as  an  extension  of  the 
facilities  clause  of  the  Act  of  1854,  had  authorized  the 
Commission  to  act  only  when  application  was  nmde  by 
a  raUway  or  by  a  canal  company.  The  Act  of  1888  ex- 
tendi this  jurisdiction  by  empowering  the  Commission 
to  receive  an  application  from  a  trader  as  well 

In  every  possible  way  the  fact  was  emphasized  that 
the  Commission  was  a  court,  and  therefore  no  concerned 
with  rate-making.  The  control  of  matters  pertaining  to 
rales  was  divided.  Powers  in  regard  to  conciliation  of  rate 
difficulties  were  given  to  the  Board  of  Trade  When  the 
provision  placing  the  revision  of  maxima  and  of  classi- 
fication m  the  hands  of  the  Board  of  Trade  was  under 
consideration,  an  amendment  to  place  such  revision  in 
the  hands  of  the  Commission  was  negatived 

The  Act  of  1888,  while  it  repealed  portions  of  the  rail- 
way regulative  acts  already  in  existence,  did  not  codify 

-u        ■■    ,  oeeaijio  Untish  liailwaua  and  ( annU   Iw  "ii         »      >. 

ch»„..,    (a  pro-tra,ler  brochure,  published  in   I^ndnn  ■„   It^f '  a   «u  ' 

the  raUway  pomt  of  view  will  be  found  i„  the  addre«,  of  T  l>o.^  O  '  "''  °' 
«nt,n«  the  London  &  North-western  Railway  before  the  Board TT't^V'  ^''™" 
b.r29. 1889.  reported  in  Railrva,  Ner.,,  November  2  ,889  pp  778  TsS'":'  °T 
Gnerson,  RaUway  Rale,.  £ngH.h  and  Foreign,  pp  93-06  ^"^  "" 


ENGLISH  RAILWAY  AND  CANAL  COMMISSION  6 

the  portions  remaining.  Consequently  there  are  still 
in  effect  sections  of  the  Railway  Clauses  Consolidation 
Act,  1845,  the  Railway  and  Canal  Traffic  Act,  1854,  the 
Regulation  of  Railways  Act,  1868,  and  the  Regulation 
of  Railways  Act,  1873.  Since  1888  jurisdiction  in  regard 
to  actual  rates  has  been  given  by  an  Act  of  1894;  while, 
under  a  law  of  1904,  the  powers  of  the  Commission  in 
regard  to  private  sidings  have  been  made  more  definite 
by  an  interpretation  of  the  "reasonable  facilities"  clause 
of  the  Act  of  1854.' 


II. 

Terminals,  Re.vsonable  Facilities,  and  Through 
Rates. 

Tlio  Act  of  1888  had  recognized  terminals.  ITie  Pro- 
v'sional  Orders  Acts  gave  them  definite  form.  The  mat- 
ter was  finally  passed  on  by  the  Commission  in  1891  in 
a  decision  which  upheld  that  of  1885.'  Justice  Wills, 
who  gave  the  decision  in  the  former  terminal  case,  was  at 
this  time  the  judicial  member  of  the  Commission.  On 
appeal  the  decision  of  the  Commission  was  upheld.  While 
the  question  of  the  legality  of  terminals  has  thus  been  set- 
tled, there  still  remains  the  question  of  the  right  of  the 
trader  to  be  exempt  from  the  payment  of  terminals  under 
special  conditions.  This  (juestion  is  of  especial  inter- 
est in  connection  with  the  m  ning  and  manufacturing  dis- 
tricts, where  the  establishments  furnishing  and  receiving 
freight  are  u.sually  situated  on  private  sidings  or  on  pri- 
vate railways.  The  importance  of  these  sidings  is  shown 
in  the  fact  that,  while  at  the  Sheffield  freight  station  the 
tonnage  in  1900  was  580,(KK),  at  a  near-by  siding  it  was 
1,100,000.     In  1894  the  Commission  was  given  jurisdic- 

'  For  ()etail  cnncerninR  the  unrepealeii  sertioni*  f»w^   WfKMifall,  7'Ae  A'cuj  Aow 
and  Practice  of  Railway  and  Canal  Tralfic,  etc..  Appendix  A. 

^Suiierhu  tt  Co.  v.  Great  \orthern  Hu.  Co..  7  Rv.  and  Canal  Traffic  Ca.HPs,  156. 


8  QUARTERLY  JOVRXAL  OF  ECONOMICS 

tlr'l  at'sTdin"  T"-'""  '™™  P^^"^-^  «^  terminal 
had  not  t         ^^       ""^  '*  ^'"'  ""'^^'^^  that  the  services 

of  1888   m"  '     "T '•     '^^"'^'-  *^^  P^---"  «f  the  I 
of  1888,  requiring  the  railway  to  distinguish  conveyance 
from  termmal  charges,  it  had  been  held  tiat  the  resTnsT 
bihty  of  the  railway  might  be  discharged  by  staUnT  hat 
the  whole  payment  wa3  for  a  conveyance  mte'    Z  th 

^:vi^::T\rr  ^" '''' ''-'  '-"■'—:' 

on  tne  railway,  m  such  a  case,  to  prove  that  it  HiH  n^. 
charge  for  terminals.^  The  Commission  h  'pc^'^  t 
allow  a  rebate  from  sidings  charges  without  proof'tha  any 
definite  amount  of  terminal  is  included  in  the  ate  A 
mn^afacre  case  for  such  a  rebate  is  made  out,  if  t  L  howt 

he  's  me'En  '"f^  ^"^^  ^^'^-"  -^'^tantiaUy 
same  rom..  T^-'  '""^  P"'''"^  ''''''  -substantially  the 
same  routes  a  s.dmgs  trader  who  does  not  require  or  use 
any  termmal  accommodation  or  services  is  c  .arid  the 
same  amount  as  a  trader  who  uses  the  'ta  ion  '  Rnt 
the  latter  rate  must  not  be  simply  a  paper  rt  "    l„  fa, 

tt;:^cti :  :fTc^' '"-  ^^'"^' ''  '->  ^^^^^^^^^ 

cockWa  e  V  t  ^°'""^'^^«'«"  *"  f«"«^-  the  rule  in  Pid- 
cocks  case,  r.e.,  to  assume  that  the  service  charges  are 
n  the  same  proportion  to  the  rates  actually  charge,  I' 
the  maximum  service  charge  would  be  to  the  sum  of  the 
maximum  rates,-i.e.,  the  maximum  rate  and  the  „  axi 
mum  terminals.'  ^'"" 

The  through-rate  clause  of  the  Act  of   ISSS  n.     •  i 
that  through  rates  statins  fK„  provides 

g"  rates,  stating  the  amount,  route,  and  appor- 

Traffifc"«:u"9.'"-  "  ""'"'  "^'"'""'^^'  «-  <"^  «'*-.  10  R.v.  and  Can,. 
Traffio^'ct:::  f;".'*  ^'"""•^'''-  v.  .V/^^..  n^.  „^  o.*„.,  „  R,.  ,„,  c,„^, 

Ca.„nf "  ^-  •''"-*'•'-  '^-'^'«  *  ^-— -  «V..9  K..a„C  Canal  T™mo 


ENGLISH  RAILWAY  AND  CANAL  COMMISSION  7 

tionment  of  the  rate,  may  be  proposed  by  a  railway,  a 
canal  company,  or  a  trader.  In  case  of  dispute  regard- 
ing the  rate  or  its  apportionment  the  matter  is  brought 
before  the  Commission.  In  apportioning  the  through  rate, 
the  commissioners  are  to  consider  the  special  circum- 
stances of  the  cases,  and  are  not  to  compel  any  company 
to  accept  lower  mileage  rates  than  it  may  for  the  time 
legally  be  charging  for  like  traffic,  carried  by  a  like  mode 
of  transit  on  any  other  line  of  communication,  between 
the  same  points,  being  the  points  of  departure  and  arrival 
of  the  through  route. 

Reasonable  facilities  in  general  must  be  such  as  can 
reasonably  be  required  of  the  railway  company,  due  allow- 
ance having  been  made  for  the  way  in  wliich  the  service 
is  already  performed.'  Similarly,  in  a  reduced  through 
rate  there  must  always  be  considered  whether  there  is 
a  commensurate  advantage  to  the  railway  company.' 
Prima  facie,  it  is  against  public  interest  to  interfere  with 
vested  legal  rights,  unless  some  compensation  or  equiva- 
lent is  given.  There  must,  therefore,  be  evidence  both 
of  public  interest  and  reasonableness  in  favor  of  the  rate 
and  route  sufficient  to  outweigh  the  former  considerations.' 
The  fact  that  two  competing  routes  will  tend  to  make 
either  company  treat  ihe  traders  more  reasonably  is  a 
consideration  bearing  on  the  question  of  public  interest.* 
At  the  same  time  the  Commission  will  not  grant  a  through 
rate  which  creates  unhealthy  competition.^     If  there  are 

^Newry  Navigation  Co.  v.  Greal  Northern  Ry.   (Ireland),  7    Uy.   and  Canal 
Traffic  Cases,  176. 

^Plymouth  Incorporated  Chamber  of  Commerce  v.  Greal   Western  Ry.  ik  L.   A 
S.  W.  Ry..  9  Ry.  and  Canal  Traffic  Cases.  72;   10  ibid,  17. 

^Didcot.  Newbury  A  Southampton  Ry.  v.  Great  Western  Ry.  it  I,,  (fr  .S'.  W.  Ry., 
9  Ry.  and  Canal  Traffic  Cases,  210. 

*Plymn'Uh,  Devnnport  *  S.  W.  Ry.  v.  Great  Western  Ry.  <{-  /..  *  .S.  W.  Ry.,  10 
Ry.  and  Canal  Traffic  Cases,  68. 

iDidcot.  Newbury  <t  Southampton  Ry.  v.  L.  <t  5.  W.  Ry.  and  Others,  10  Ry. 
and  Canal  Traffic  Cases,  17. 


8 


QUARTERLY  JOURNAL  OF  ECOXOMICS 


Belves  will  not  bTsuffilnt T'''^''  '"''''  ^^  ^h^'"" 
The  particular  cir«an    /  f^^^  '''  ""*  ^^^^'^^  '*• 
rate  must  be  consider'  1     Th.  ^'T'^^'  "-""^^  ^"^ 

over  a  proposed  rom  not  fo  r''""^^'^"-^  of  a  rate 
ing  rate  over  an  altlr  u  :  rSTt^  ^^  ^^'^^- 
the  latter  route  xnay  be  reasonable'  ^  ^'  '"*'  "^^'• 

the  Co..,sSn  harnraTL7edtlav%r^'  ''''' 
eral  principle  on  which  throu^l!  ^  "^^^^  ^"^  g^"' 
tioned,  it  will  consider  any  spfj^'  ^''  *°  ^^  Wr- 
tion  or  special  char  Js  TonT  '''"'"'  '"  ^«"«t'-"«- 

Powered  to  make'  ft  is  2T''  T'  ^^^^  ^^^  «»»- 
has  power  to  rescind  a  th.^  ''  *^"*  *^^  Commission 
the  Act  of  isi'    So  far  n    '    T  °"''  ^^^^^''^^-l  ""der 

In  the  claims  m^,eb;can"lTr  f".'""  *^'^- 
obtain  through  rates  con«WK,      ^  ^"''^  companies  to 
upon  the  tecfnic:   r;,^^^^^:^^^^^^^  ^as  been  laid 

Thus  it  was  decided  inlgg    'hlTth  ""'  "'■^""^>'-" 

ter  Ship  Canal   possessed   t'l,^^^^^^^^^^^ 
quays,  although  these  railways  we  esLSv^'-;"  ''' 
service,  constituted  it  a  milJl  ^^  ^°''  "^  ^^u 

-tion  Of  .ho  co„.ii::i„vr„tpro:.;raTh '"''»■  *' 

^«*o'.  A-™..„.„  ^  .•„„«„,„„„„  „       ^,^  ■"••  '"  "-^  ■  •"""  ^'"■'"  •■•-ffi"  Cas...  «2. 

>0  Ry.  and  Cana,  Traffic  Car!?*"  ''^^  ^■'^-<"  ">"-"  «.-  *  i.  *  ,■.  „,;,,., 
'Forth  Hridar  ,t  ,VorM   Rr,V,«/,   ;.      ,. 

^  s,.^i  .!^  r  ^""'  "*  ^-»:  """Ti^r:.:::;  r '"- ''-  -  '-- 


ENGLISH  RAILWAY  AND  CANAL  COMMISSION 


9 


ground  that  the  railways  possessed  by  the  dock  company 
did  not  constitute  a  railway  within  the  meaning  of  the 
act.'  In  1903  a  further  application  of  the  same  com- 
pany, subsequent  to  its  acquisition  of  a  short  railway 
with  which  it  had  made  connections,  was  refused  on  the 
groimd  that  the  difficulties  of  exchange  of  traffic  did  not 
justify  the  granting  of  such  an  application. 

The  Commission  has  looked  at  each  through-rate  case 
by  itself.  It  has  refrained  from  proposing  a  through  rate. 
It  has  limited  its  action  to  the  acceptance  or  rejection 
of  the  proposed  through  rate  as  brought  before  it.  The 
power  to  propose  through  rates  has  been  of  little  value 
to  the  traders.  Normally,  they  have  not  been  possessed 
of  the  exact  knowledge  necessary  to  the  making  of  a 
through  rate,  with  the  result  that  they  have  been  successful 
only  in  one  out  of  five  applications.  The  following  sum- 
mary gives  details  with  reference  to  the  through-rate 
applications  formally  acted  upon  by  the  '^.mmission:— 


By  canal 
company. 

By  dock 
company. 

1 

By  railway 
company. 

By  traders. 

By  munici' 
pal  corpora- 
tion and 
traders. 

Year. 

1 
i 

li 
1 

5 

1 
1 

1 

1 

1 

1 

1 

S 
1 

t 

j 

2 



No  action  p 

rior  to  1895. 

1895 

1    !    1 

1896 

1 

_ 

- 

_ 

1 

_ 

_ 

_ 

1897 

1 

- 

_ 

_ 

3 

_ 

_   '   _ 

_ 

1 

189S 

- 

_ 

- 

- 

_ 

_ 

~   i   - 

_ 

1899 

- 

- 

_ 

_ 

2 

1 

-   i   - 

_ 

_ 

1900 

- 

_ 

- 

- 

_ 

_   j   _ 

1 

1901 

- 

- 

_ 

_ 

_ 

-   t   - 

_ 

1902 

- 

_ 

1 

_ 

_ 

_ 

j 

1903 

- 

- 

- 

2 

- 

- 

1 

1 

^London  and  Eatt  India  Dockt  Co.  v.  Great  Eattern  Ry.  &  Midland  Ri/.,  11 
Ry.  and  Canal  Traffic  Cases.  57.  Thi.s  was  a  majority  decision,  Pefl  dissenting. 
The  decision  of  the  Court  of  Appeal  was  Riven  by  Mr.  .Tustice  Wrigljl,  who  wa« 
a  member  of  the  Commission  when  the  Manchester  Canal  ease  was  decided.  He 
distingui.shed  the  rases. 


10 


QUARTERLY  JOURNAL  OF 


ECONOAflCS 


III. 

Undue  Preference 

■he  invesligalion  of  ,S82  ,7°         °'"'''   """''"   ''"""S 
ta  domestic  rate      S,  ','"',""'">•  '"""'"'i-'  ™,t«l 

plained  ,hot    Se  P,^      .       "  '"«"''  ''^""^  "■<"- 

f™.  give  p*.,  La^l    t  "■"  ''""*  ""  '"»"'"« 

a.  the  same'r       'r^re  "iv™  ■;"  Tf  ?  ■"=*  >»'"" 

Fo-iuamentary  discussions  of  1887  inrl  i«8s  *i, 
were  constant  complaint-   of  nr  f  ,  ^^^  ^^'"'"^ 

stated  that  no  ZZT  P'"^^''^"*'^'  '"''ites-  It  was 
traffic  coui  J  be  con.  d  T""'  ''"''""^  ^'^^  railway 
preven.  pr  erential  it  1  T  "''''''  "^'^'^  ''''^  »«^ 
The  government  held  t  '"  T  "'  ''^''^'g"  P'-°d"''ts.' 
be  made  hZZnEnJ^rr'^^'V'  ''^^""^^  ^^ould 
chandise  because  of  o^gt."''"'"^  ''''  '^'''^^  -- 

The  undue  preference  section  of  the  Act  of  is«« 
vides  that  where   for  fh^  ^'  ^^^^  PJ'o- 

rates  are  chaSto  o  e  .1  '?"""''  ^^^"•^^^'  '«-- 

other  or  anv  diff  PP"'  '^^"^  ^'^  'charged  to  an- 

preference   1      be     HU^ir'  ^°"^*'i-«  ^  -due 
,,^    .,  ™    "'^    ^^'^^^■'^y-      In    considering 

'  »ee  evidence  of  J    H    Rnif        n 

.« ;."= t;lt'^'S';«.«'  ■■-•  •"  --. .... ...  „. ,™,  ,„. 

*Lord  Salisbury,  Hansard    ISSK   .h;    . 

»ra,  1888,  third  series,  vol.  323,  p.  1052. 


ENGLISH  RAILWAY   AND  CANAL  COMMISSION 


11 


whf'ther  the  action  complained  of  constitutes  an  undue 
pn  i-rence,  the  commissioners  are  to  consider  "whether 
such  lower  charge  or  difference  in  treatment  is  necessary 
for  the  purf)ose  of  securing  in  the  interests  of  the  public 
the  traffic  in  respect  of  which  it  is  made.  Provided  thai 
no  niihvay  company  shall  make,  nor  shall  the  commission- 
ers sanclio,.  any  difference  in  the  tolls,  rates,  or  charges 
made  for  or  any  difference  in  the  treatment  of  home  and 
foreign  merchandise  in  respect  of  the  same  or  similar  ser- 
vices."^ The  final  clause  of  the  section  prohibits  a  higher 
charge  for  similar  services,  for  the  carriage  of  a  like  de- 
scription and  quantity  of  merchandise,  for  a  less  than  is 
charged  for  a  greater  distance  on  the  same  line  of  railway. 
The  concluding  clause  of  the  .section  is  not  only  wiiier  than 
the  "long  and  short  haul"  claases  of  the  American  stat- 
utes, it  is  also  much  wider  than  the  prohibition  hitherto 
existing  in  English  legislation.  An  attempt  was  made 
by  the  railway  interest  to  have  a  "long  and  short  haul" 
clause  placed  in  the  legislation.  It  was  argued  that  where 
a  question  of  preferential  rates  came  up,  the  comparison 
should  in  fairness  to  the  railway,  be  made  with  traffic  car- 
ried over  the  .same  portion  of  the  line.'  It  was  held, 
however,  that  the  consideration  of  this  matter  could  safely 
be  left  to  the  discretion  of  the  Commission. 

Complaints  concerning  undue  preferences  have  occupied 
a    prominent    place    before    the    Commission.     Broadly 

1 1  have  italicized  this  so  as  to  bring  out  the  distinction  of  ti^atnient  between 
home  and  foreign  traffic.  In  tb"  ■'",  introduced  in  18S7,  clause  25  provide<i  that 
the  commis!»ioners  were  to  con^l,;"^  whether  the  difference  in  charges  or  treatment 
was  necessary  "for  the  iiurpose  of  securing  the  traffic  in  respect  of  wh'ch  it  was 
made."  Ihe  vague  phrase,  "in  the  interests  of  the  public,"  contained  in  the 
legislation  of  1888,  was  placed  in  the  Bill  of  1887  by  amendment. 

^The  proposal  v/as  voted  down,  both  in  Grand  Committee  of  the  House  of 
Commons  and  in  the  House  itself.  The  motion  will  be  found  in  Hansard, 
1888,  third  scries,  vol.  .329,  p.  4.'j2.  The  stntement  of  Mr.  .Acworth,  Henringt 
before  the  Committee  on  Interatate  Commerre  of  the  United  Staiet  Senate,  etc.,  1905, 
vol.  iii.  p.  18.')!,  that  there  is  in  the  Act  of  1888  a  "long  and  .short  haul"  clause — 
"the  short  distance  included  in  the  long  distance" — is  evidently  attributable 
to  the  fact  that  he  had  not  a  copy  of  the  act  before  him. 


wmmmmmm 


12 


QUARTEn.r  JOVHS'A,  o.  ECOyOMICS 


group  rates,  and  rebates  in  respect  o^' ■''^°'"*  ''^'''' 
erential  rates,  concerned  with    ,  ^""""'^'  ^''^  P^^^" 

an<i  import  iraffic.  B  Le  i88s'^'"'"l-  '^'"''^"  ^""-^ 
[or  like  .services  were  only  V^  ^^'"'^T  "^  '^'''^'' 
burden  of  proof  was  on  hef  /  '''"'""'''"'  ^"^^  ^^e 
railway.  In  the  elrlierde  '""""'  """  ''  '^  «"  ^^^ 
Each  ca.se  was  conSe;  Hr;;  "^  ^'^  ^'^  ^Parent, 
develop  a  particular  tmffi/-  decreased  rate  to 

undue'preference   "Thfnt  e  L?"'7'"  '"■^'^'''^  -^  - 
not  sufficient:  it  must  be  shl      f  f^'^^rence  existed  was 

reasonable  "    Diff  "el  "  ^'^  ^'  """^"«"  and  "un- 

there  were  diffe  ^^^  T.^ ^  ^f  ^  ^«  allowed  whei; 

Additional  points  have  he  °f  ^°»^«^yance.- 

Comn.ission.  A  contract  ,n  ""'''  ""''^'-  ^''^  P^^««nt 
-ation  to  a  partiX  1  ^erH:  IntnT  "".^^  ^  ^'^^" 
are  also  lower  tolls  given  bv  1  n  P'-^f^rence,  as 

prevent  .  large  <leale  IviL  .  k^'"""  ''"'P^'^y  ^^ 
si-ilar  charges  shS  be  i  fo^  r"'  ''°^'"^"3^' 
unreasonable  preference  is  .  """^^''  ^'■^''^««-'    An 

'Rithtnn  I.ncnl  Bonn!  ,.     7  , 

^Timm  tt-  .Son  v   r-r    <  e- 
*Per  Lord  Hersrli.M  :,,  »•  i 

:,'f.«'*-.  -  appeal  si;;/;:  '■'c.Ta.''Trffi'  r"  °'*'^'  ^-^  ^"■'"'-  *  ^••  -^•  «v 

■  "»■•  '1  App.  Cas,  1)7. 


EXaUSIl   HMLWAV   AXD  C.iXAL  COMMISSIOX         1.} 

There  can  be  no  matheiiKitical  e(iiiality  in  regard  to  the 
charges  or  advantages  l)t't\veen  places  which  are  outsiile 
of  a  group  and  the  different  ini'iiil)ers  of  a  groiip.  Com- 
petition and  convenience  to  the  neiglihorhood  are  to  \n> 
consi(h'red  as  affecting  the  justifiability  of  a  group  rate.' 

On  the  (juestion  of  (hfferential  rates  the  Coniniissi')n  has 
reversed  itself.  As  has  bee;i  indicated,  the  Conunission 
is  empowered  to  consider  whether  the  rate  conii)lained  of 
'"is  necessary  for  the  purpose  of  securing  in  the  interests 
of  the  public  the  traffic  in  respect  of  wliich  it  is  nuide." 
In  1890 '  complaint  was  made  that  lower  rates  on  grain 
and  on  flour  were  given  from  CanlifT  to  Birmingham  than 
from  Liverpool  to  Birmingham.  The  distances  were 
respectively  173  and  98i  miles.  The  railway  company 
contended  that  this  was  on  account  of  competition, 
and  that  the  lower  rate  was  necessary  (1)  in  its  own  in- 
terest, (2)  in  the  interests  of  the  public.  Direct  inland 
communication  exists  between  Bristol  and  Birmingham 
by  way  of  the  Severn  River  and  canal  navigation.  There 
is  also  a  combined  sea  anil  rail  route. 

Justice  Wills  pertinently  .said  Parliament  had  dealt 
with  the  matter  of  undue  preferences  with  a  "faltering 
hand."  It  had  left  to  the  Conmiission  the  responsibil- 
ity of  deciding  many  things  which  would  more  n-iturally 
have  been  laid  down  in  legislation.'  The  somewhat  in- 
choate nature  of  the  undue  preference  clause  is,  however, 
more  correctly  attributed  to  its  compromise  origin.  While 
it  was  intended,  in  a  general  way,  that  the  phrase  "in 
the  interests  of  the  public"  should  protect  the  interests 
of  the  consumers.  Justice  Wills  was  undoubtedly  correct 
in  saying  that  Parliament  had  no  clear  idea  of  what  it 
meant.     He  considered  that  the  "public  interest"  must 

'Pickering  Phippt.  etc.,  87-88. 

'Liverpool  Corn  Tradcrt'  Auociation  v.  London  <t  .V.  W.  l{y.,  7  Uy.  aud  Canal 
Traffic  Cases,  125. 

"Page  137. 


14 


QUARTEHLy  JOVRS,,,  oF  ECOXOMWS 


be  something  widor  th-in  ih,„    r 

Porlant  "public  intere '  '  wo"I  M  "^'^  '"'  """  '"'^  '"- 
in  grain  and  flc.ur  hou  d  Tv  t  "f "'''^  ''  ^'^^  ^'^"^^ 
from  Caniiff  to  iJZ; ,am  '    ThT      T'""  'r^'"  ""^« 

-iition.t^e^irSd^rrnr?'^^^'^^^^' 

trade.     Sir  Frederiok  Peel  r,.,.  u  *''   '"'^"''''^  ^^ 

"A  traffic  which  d/rrln^  t^^ 

competitive  can  have  no  k.."'^'"'*  ''■^'"^'  "'  heing 
favo^  however  netja^ai:t  '  t'^'""'""  "''^^^  '"  "« 
the  competition,  rTowTv  r  "cht'"''^  ?"  ^  ^"  "'^^ 
fit  of  the  compLny  to^Z^^  aT.^;"  ^^^  ^-- 
of  the  railway  to  compete  with  tL''  .      '''  ""^"'Pt 

of  the  traffic  which  w  f."^  ^  Se''""'  -'-stages" 
-.1  rail,  or  by  i„,,,,  water  Ilttn'^oT-^'-'^K"^ 
was  un  ustifiable.  His  general  r^f'  •^'""■"Rham 
assumption  that  the  lowfn  f    °"'"^  '■^"■'^^•'  «»  the 

-  no  profit/    In     that         '' f      '"^  Car.IifT gave  "little 

placed  I  L;ve;:ln:\hXhlv\'^"'^  ^'^'^  ''''' 
It  paid.*  '^"'y  remunerative  rate" 

The    unsatisfactor-    nositinn    f„i 
i"  regard  to  the  effect  of  1  "    ^^    '^'^    ^'^^'"^io" 

to  which  this  wl-t  L  aker  ""''  ""'  ""  ^^'^^^ 
however,  apparently  justi  od  '  tUT'"''""'  ^^^^' 
matter.  Wlnle  the  hw  w,.  ?  f  '''""""'  «»  'he 
the  leading  decisi  „-".:  Prcl""'  Tf  ^'^"^-^-^-y^ 
titior.  out  of  considerati:.:Vr.:^"f •'-"■'■  ^""P" 
-onontheunduepreferen^'c^:!:--- 

'Pages  13ti-138.  ^ 

-  These  are  Cardiff    Pni-.;  i,      i     . 

arum,  Fortishead.  Avonmouih.  Bristol    »,,  i  ^, 
'Pages  140.  141.  "nstoi,  aiid  sharpness. 

Build  (P.  o.)  V    /     ,f   V   II-  r? 
ea.«,  bearing  „„  ,hi,,  ^bjee,'  are  deal;'  wi.h^K  "T'  ^''""'  'T"*'^  Ca«..,  .-jb^      -fhe 


'-•>f: 


EXGLISll   RMIAVAY   AXD  CA\.\L  CO.W.U/.S'.S/O.V 


15 


i 

I 

i 

I 


again  in  1892.'  Complaint  was  made  of  an  unduo  prpf- 
ercnco  in  flour  and  grain  lu'twccn  the  Sovcrn  ports  and 
Birmingham,  on  tlio  onf'  hand,  and  Birkenhead  and  Bir- 
nangham,  on  the  othrr.  While  the  rate  from  Birkenhead 
to  Birmingham,  a  distance  of  9H  miles,  was  ll.v.  (k/.,  ;' 
rate  from  Bristol  to  Birmingham,  a  ditanee  of  141  miles, 
was  8.S.  Qd.  The  ra''way  contended  that  the  apparent 
anomaly  was  attributable  to  water  competition.  Both 
a  majority  and  a  minority  decision  were  given  In  the 
dissenting  opinion,  delivered  by  Sir  Frederick  IVel,  it 
was  held  that,  while  the  eviilence  justified  low  rates  from 
the  Severn  ports,  at  the  same  time  the  liirkenhea  !  rate 
should  be  reduced  so  as  to  give  a  lower  mileage  rate.  'Die 
majority  opinion  upheld  t'  railway  position.  The  : -.tes 
complained  of  were  attributable  to  effective  coirpetition, 
maintained  by  a  competing  raih'aj  and  bj'  wa»er  comj)e- 
tition.  The  existing  ine<iu!ility  in  rates  was  necessary  to 
give  the  section  of  country  around  Birmingham  tlu  ad- 
vantage of  tiie  supplies  both  from  the  Severn  ports  and 
from  Birkenhead.  Justice  Wills  stated  that  in  the  former 
decision  he  had  con.'^trued  "public  interest"  too  nar- 
rowly. The  public  intended  was  the  public  of  the  local- 
ity or  district.  Any  con.^iderable  portion  of  the  popu- 
lation in  general  as  opposed  to  an  individual  or  an  asso- 
ciation was  sufticient.' 

While  it  is  contended  that  one  principle  was  applied  in 
the  first  Corn  Traders'  case,  Ix'cause  the  amount  of  traffic 
affected  was  small,  and  that  a  different  principle  was  ap- 
plieil  in  the  second  case  because  the  amount  of  traffic 
affected  was  large,'  it  would  appear  that  the  change  of 

^Liverpool  Corn  Traderg'  Aaanciation  v.  Great  M'tMtru  Hy,,  7  Ky.  anil  Canal 
Traffic  Cases.  114. 

'^Liverpool  Corn  Traders'  A»»ociation  v.  Grmt  W'e»iern  Hy.,  7  Hy  arnl  Cunal 
TraflSc  Cases,  127. 

^See  Boyle  and  Waghorn.  T/if /.aw  rf^a/trif?  to  Railway  and  Canal  Trnffir,  vol. 
i.  p.  4;  also  fvidencp  of  Mr.  W.  M.  Acworth,  Committee  on  Interstate  Commerce, 
ae.,  1903.  vol.  iii.  p.  184J. 


16 


QCARTEHLy  JOVHS.U.  OF  KCOXOWcs 


position  was,  „,  real  ty,  attributahin  ...        i    •  • 
case  aprx-alnl   Hnu   ,\,    ""'^'""^'""''  '"  «  'locision  in  a 
»|j|«ai((i   hoin   tlic  CoinrnisMiuii   in    l,S')l  '     r,.   .u- 
the  roast  met  ion  of  "public  intrrp«r' i    .  V       •        '^"' 
It  was  eont,.n,le.i  tha    a   I  ff "  T  i,  ^''"  '"'"'^■^^- 

traHa,  but  also  whet iior  it  Z  i^/.  "'"-'  '"  "'^^^'^ 

way  to  secure  this  t^ffi  ^l  'th  "Tl  "'  ^'"  ^'"''- 
l^.i^>aturo,  he  oontinu:!^^"^:^.^  ^:':;::  ""  ''•  ^'"^^ 
eases  where  the  traffic  could  not  bo'  b  i,  /  VT,""^ 
rate  was  raised,  and  where  at  tJ.«  ""'"  "^"  '^  the  lower 
unfair  to  deman.i  1  a  chiton  Si'"'"'  ''  ""'^''^  '^^ 

raUway.   in  carrv.n,  traffi^     n  a    ate"  '  ■''''  ^^^ 

sea-borne  traffic    nu.t   2w  "h/?      ^""'P-^^'^'^e  with 
public  interest  i^volv.l      The  ,?  ""  '\^'"^* 

P..^;.s  Obtained  by  e...a,n^t^--:^ 

co"::i::;:\:t^r''^jn::r^^^^^^^ 

as  in  the  United  States  as  a  f , w       f    '  /      ""'  ^''^^''^' 

T»ffi  ^i'*'^"«'  ^*"P'"  ond  Other,  y.L.dtyur„ 

Traffic  Cases,  83.  "  '^^  "^'  ffv-  "nd  Other,,  8  Ry.  ,nd   -an». 


332. 


PiJcering  Phipp,,  etc..  102  and  103. 

•S«  statement  of  Lord  Salisbury,  Han«rd   1887  thi^        ■ 

luuva,  1887,  third  series,  vol.  314 


KsausH  nMi.i\y  .\.\n  r.i.v.i/.  ro.u.u/.s.svo.v 


17 


nizod  offpctivo  romiM'tition  us  a  just Kicaf ion  «)f  .i  lower 
rate  for  the  loiigrT  distHlirc.  WhiTc  a  higher  titi'  is 
charged  for  the  shorter  than  for  tlie  ^n  iter  distance,  the 
less  Ix'injj  included  in  the  greater,  tiie  ('onimissif)n  has 
held  that,  in  the  al)HPnce  of  effective  eonijx'tition  at  t  • 
longer  distance  point,  such  an  arrangement  is  not  ju-^fi- 
fiable,  and  ti)at  the  shorter  ilistance  j.oirit  should  share 
on  a  mileage  basis  \v  the  low  rate  gi\<  ii  to  the  longer  dis- 
tance point.'  The  effect  f)f  com|M'tition  has  also  been 
recognized  in  the  case  of  export  traffic.  In  19();{,  in  the 
Spillers  &  Bakers  case,  a  low  ".shipment"  rate  was  held 
nece.s.sary  to  obtain  traffic.  It  was  considered  impossible 
to  raise  this  ra*e,  and  the  dissimilarity  of  circumstances 
did  not  warrant  a  comparison  of  the  higher  tlomestic 
r  ite  vith  the  lower  export  rate.'  In  1904  a  britiuctte 
rnmnifactr"  ,i  firm  claimed  that  it  was  unduly  prejudiced, 
sine  it  paid  the  domestic  rate  on  it.s  raw  material,  while 
the  manufactured  product  came  into  competition  abroad 
with  coal  carried  on  a  low  export  rate.  The  Commission 
upheld  the  principle  of  export  rates,  and  further  found 
that  the  railway  was  under  no  obligation  to  regulate  its 
charges  with  reference  to  the  ultimate  competition  com- 
plained of.' 

From  an  early  date  English  railway  law  has  held  that 
wholesale  rates  for  large  shipments  do  not  constitute 
an  undue  preference.  So  early  as  1858  in  Nicholson's 
case,  a  leading  case,  it  was  decided  that  carrying  at  a 
lower  rate  in  consideration  of  large  quantities  and  full 
train  loads  at  regtilar  periods  was  justifiable,  provided  the 
real  object  was  to  obtain  a  grr  .itei  profit  by  i educed  cost 
of  carriage.     In  taking  this  point  of  view,  it  was  recog- 


y 


'  Timm  *  Som  v.  .V.  E.  Ry..  Lane.  *  York  liy..  and  Olhtri,  11  Ry.  and  Canal 
Traffic  Caw!).  214. 

'.S7«/;iT«  St  Baktr:  Ltd.  v.  Talf  Vale  Ry.,  20  The  Timi-ji  I-.  K.  101. 

*  LanciuhiTt  Patent  Fuel  Co..  lAd.  v.  L.  A.S.  iV.  Ry.,  Great  (,'intrnl  Hy,.cnd 
Othera,     ,\  .nummary  will  be  founil  in  the  Railwru  Timet,  .\uffust  13.  1104. 


18 


''■"™''  -^''^•v..  o.  .«,,,„,,, 


was  rrcogniz,,!  that  Jowor  nt .  .  'I""""  °^  ^^^'^  i^ 
«^»rai,.loa.l  sl.ip,„.nts  c"  T^Wvf'  '^  ^''""'  '"'''^"■'^e 
wo.«ht   into   trucks.'    Tho   J.  '         •'  ^"   ^"'^'^  ^  ^^''^'''ffr 

-^".-^  .a.  He.  .4=\r;;^tr  r 

^["'"  the  estabh-sf,e<l  n.e  I^.,    t  ''^'''''  "^  *^-  P^r  ton 

;vas  puarantoecl,  an,    that   t he'tT  "'  "'•'''  '-^  ^'oar 

for  five  years.  The  Con  m  '  ''?"P'''"^"^  •^houl.l  last 
hol<l  sueh  rebates  exce2  7"  t';"  '''''  ''"  ""-'"-^  ---S 
that  the  rebate  is  justifie  rby?' 7"'"  ^'''^"'  '''^'^  f'-" 
con.pany,  an.l  that  the  r  b.te  J.  r/""  '"  '"'^^  ^^  ^'^e 
«f  the  saving  to  the  con..^ ,  t"  ,""'  '^  "  '^-^-- 
a  practice  as  this  has  darters  .  ''''""'^^  ''^^t  ^""ch 

f  lerable  number  of  co^a  „ "t''"  k"'  ""'  '^-  ^  ™n- 
the  excessive  advanta^'  "bH  ^J  ^"''''•-^.1  against 
^^•";;h  &  Co.  under  tffeir  reba  "  '  '"^  '""■"•  '''''■''^''' 
MKlIand  Railway.  In  one  case  thfT"^  ''''^  ^he 
contradictory,  there  are  f  '       ""^''  ^he  evidence  is 

^^^hilo  the  ci/cli.;:,;    ,    ;;p-'^-  .^^  -^  -ret  rebate' 

-t-icasajnstificati::;;'::;;;r:^^^ 

'■v.^^W  V.  ov.„Mr  ,  •""^•»ff"Nthepohcy 

^./>„., ' '" """ '"""  '>■"«'•  <■-;, ..,T' ' """  '^■"«"  ^^--.  ^-.-i; 


■'WnW//  .iT,<OMpr, 


•       1'"//,.,,,/     /,.,,.     „     „l     Q 

■  '"  ">■■  "■"'  (-"..Hi   Iraffi 


'*•    CllNt'S. 


Traffi.  ■cas.?".^;;""""',;"'""'  «'"-  •<■   r..  ,.    „ „H     ,   ,. 


me  *  Co..  ul  ,uprn.  p.  ooj, 


ESdUSlI   RMIAVAY    AM)   r.l.V.lA   COXfXflSSlOX 


19 


of  the  present  Coiiiinissioii  has  not  been  clear-cut.  In 
some  cases  it  has  recognized  (juantity  as  a  justification  for 
a  rebate.'  But  it  has  in  other  cases  atteinpteil  to  confine 
cost  to  mere  economies  of  hooii-keeping,  attributable  to 
more  prompt  .settlements,  etc.;*  and  it  has  expressed  the 
dictmn  that  rebates  in  respect  of  (juaMtity  would  justify 
a  differentiation  of  charges  in  so  many  cases  that  the  rule 
against  preference  would  be  in  danger  of  disappearing, 
"and  the  small  trader  would  be  in  a  more  helpless  posi- 
tion than  the  position  in  which  he  now  is."' 

While  tlie  traders  recognize  the  value  of  export  rates, 
and  the  effects  of  competition  thereon,  the  conditions 
wiiich  affect  the  import  rate  are  often  neglected,  and  the 
low  rail  rates  given  on  imported  goods  are  often  attrib- 
uted to  the  stupidity,  if  not  turpitude,  of  the  railways 
in  pref(>rring  home  to  loreign  goods.  When  the  Act  of 
1888  provided  that  the  Commission  should  not". sanction 
any  difference  ...  in  the  treatment  of  home  and  foreign 
merchandise  in  respect  of  the  same  or  similar  services," 
it  was  claimed  that  this  absolutely  forbade  preferential 
rates,  and  that  the  home  traffic  would  therefore  be  car- 
ried at  the  .same  as  that  of  foreigners.*  Notwithstanding 
this  enihusia.stic  prediction  there  is  at  present  a  reiterated 
demand  for  a  select  committee  to  investigate  the  cjuestion 
of  preferential  rates. 

The  iliscussion  of  preferential  rates  in  England  has 
proceeded  along  lines  familiar  to  every  student  of  the 
effects  of  water  cumpetition  on  railway  rates.     "Why," 

'Daldy  and  Otiieri.  ut  nujirn.  p.  .11(1.  Sep  also  Uirkrlton  Main  ColUrru  Co. 
V.  IhM  ,{•  Hiirmln/  H}j..  Itiiihinii  Timen.  July  -'.1,  ISMW.  In  iIuh  oiuw  the  cotiKid- 
fnitinn  of  the  lnwcr  rate  was  a  iiiinitiuiin  (if  :)S,(KK)  tons  per  annum. 


-'  H.ff..  Charrinuton,  SelU.  rtr.,  ytt  supra,  '2'M). 


'  Ibiil.  Ml. 


<\Viigh(irn  anil  Stevens,  Heport  upun  the  I'roceexting'  t'l  the  Imjuiry  held  hu 
the  Hoard  .>/  Trade.  ISKIt,  l.siKI.  pp.  12  anil  100.  This  repiirl  I.)  lh,>  Ijinc-a.-hire 
and  Cheshire.  Devon  and  l.'ornwall.  ami  Irish  ('.inferences  (trailers'  Drganijatiuns) , 
wtt.s  piihlisheil  at  Manchester  in  IHSK).  It  contains  a  searching  but  extremely 
acriil  uriil  hiiisHed  exaniiiiation  of  the  railway  position. 


w 


t  t ' 


■;  '  .$  .    »  U.3JU   '^^luuf  i  % 

^'   .  jr^  -HyOf  «►     •^*^'    **^i~     '  -i«'''(      1'^    .1';^    ']  ^   cL^ 


yY. 


EA!m  \'Mrs,iiiiaL'M.  a^.ja 


20  QUARTERLY  JOURNAL  OF   ECONOMICS 

asks  one,  "if  they  (the  railways)  can  carry  at  a  profit 
from  foreign  countries,  can  they  not  carry  home  proiiuce 
at  the  same  rate?'"  If  the  London  &  North-western 
carried  a  trainload  of  meat  from  Liverpool  to  London 
at  25?  ecause  it  was  American,  it  should  be  able  to  do 
the  same  wherever  the  meat  came  from.'  "Ex  hypothesi 
they  (the  railways)  alread}-  got  a  profit  out  of  the  prod- 
uce they  carried,  ...  and  what  they  would  have  to  do  was 
to  put  the  English  farmer  and  producer  on  the  same  foot- 
ing as  the  foreigner.'" 

The  question  of  preferential  rates  was  brought  before 
the  Commission  in  1895  in  an  exceedingly  important  case, 
which  lasted  eight  days.*    Complaint  was  made  that  the 
railway   charged   lower   rates  from   Southampton   docks 
to  London  on  the  following  goods  of  foreign  ongm-wool, 
hay,  butter,  cheese,  lard,  hops,  fresh  meat,  bacon,  hams- 
than  it   charged    on    similar   articles    of    home  ongm, 
which  were  normally  carried  a  shorter  distance,  and  that 
the   services  rendered   in   respect   of   the  foreign   traffic 
were  not  less  than  those  rendered  for  the  home  traffic 
in  the  proportion  that  the  rates  were  lower.     A  few  ex- 
amples will  serve  to  show  the  nature  of  the  dispanty 
complained  of: — 


Distance 
travelled. 

Rates  on  fresh  meat,  hay,  and  hops  to  London. 

Station. 

Rate  for  moat. 

Rate  for  hay. 

Rate  tor  hops. 

Southampton  docks 
Southampton  town 

Alton 

Botley 

76  miles 
76     " 
45     " 
76     " 

17».  M 
26».  :! 
0».  2,i. 
27t.  6d. 

bt. 

g«.  8<i. 
7».  4,1. 
g>.  Stl. 

6>. 
20f.  lOd. 
20«. 
22».  7d. 

I  Ixjrd  Henniker,  Hansard,  1885,  third  series,  vol.  315,  p.  412. 
•Mr.  MundcUa,  Hansard,  1888,  third  series,  vol.  329.  p.  413. 
•  Mr.  Chamberlain,  Hansard,  1888.  third  series,  vol.  33g.  p.  445. 

..lfan««n  Hou.e  A,^natu.n  on  Railuay  and  C.nal  y-"'?:' '"^ ''«  f  "^  '^'"^ 
iom  V.  London  4  Sauth^-Um  Railway.  9  Ky.  and  Canal  Traffic  Cases,  20. 


ENOLISH  RAILWAY   ASD  CANAL  COMMISSION         21 

Back  of  the  complaint  lay  a  competition  of  ports  for 
foreign  traffic.  The  London  docks  were  in  competition 
with  the  Southampton  docks,  which  were  owned  by  the 
London  &  South-western  Railway.'  Competition  existed 
between  the  all- water  route  to  London  and  the  water  and 
rail  route  via  Southampton. 

At  first  the  railway  endeavored  tc  justify  the  apparent 
anomalies  on  the  grounds  that  the  rates  complained  of 
were  made  on  the  basis  of  water  competition,  and  that, 
besides,  they  were  balances  of  through  rates.  But  the 
Commission  ruled  that  .':uch  matters  could  not  be  consid- 
ered in  evidence  undo  the  provisions  of  the  .\ct.  Under 
these  conditions  the  railway  had  to  fall  back  on  the  unsat- 
isfactor  andard  of  cost  of  service.  It  was  shown  that 
the  rati.  ,or  the  home  traffic  covered  a  variety  of  services 
—e.g.,  receiving,  weighing,  loading,  covering,  superintend- 
ence, provision  of  station  accommodation,  switching — 
which  were  not  included  in  the  rate  on  the  foreign  goods. 
The  foreign  merchandise  was  less  valuable,  less  liable  to 
damage,  more  easily  and  expeditiously  handled,  could  be 
dealt  with  at  times  more  convenient  to  the  railway,  always 
in  larger  quantities,  and  generally  in  a  much  more  eco- 
nomical manner.  On  account  of  better  baling,  to  cite  one 
example,  three  tons  of  foreign  hops  could  be  loaded  into 
a  truck  that  would  hold  only  two  and  a  half  tons  of  English 
hops. 

The  traders  contended  that  such  conditions  of  traffic 
as  regularity  and  quantity,  while  admitted,  were  not 
capable  of  being  included  in  the  "similar  services"  spoken 
of  in  the  undue  preference  .section.  Their  contention  was 
in  substance  that,  while  there  might  be  differences  in  tlu; 
case  of  home  traffic  because  of    dissimilarity  of  circum- 

'Whfin  these  liorks  wore  .-u-quireri  by  the  railway  in  1892,  it  was  anticipated 
they  would  be  a  formidable  competitor  of  the  London  docks.  For  information 
de.Hcriptive  of  the  highly  developed  facilities  for  handling  traffic  at  the  South- 
ampton docks,  see  Railway  Age.  July  1,  1904;   Uailwaii  \rwt,  January  7.  ltf(J5. 


22 


QUARTERLY  JOVRXAL  OF  ECOXOMICS 


Stances,  in  the  case  of  the  foreign  traffic  it  was  intended 
that  there  should  not,  on  any  account,  be  any  difference 
in  favor  of  foreign  goods. 

Had  the  contention  of  the  traders  been  successful,  it 
would   have   established   a   principle.     But   the   decision 
of  the  Commission,  which  has  been  claimed  as  a  victory 
by  both  parties,  was  of  a  compromise  nature,  and  pro- 
ceeded on  the  careful  lines  already  laid  down  that  undue 
preference  is  a  matter  of  the  facts  of  the  particular  case. 
The  lirticles  with  which  the  decision  concerned  itself  were 
hops,  fresh  meat,  and  hay.     These  were  the  only  articles 
in  which  there  was  any  considerable  traffic  from  the  sta- 
tions  intermediate   between   Southampton   and   London. 
The  rates  quoted  on  the  other  articles  were  simply  "  paper" 
rates.     Sir   Frederick   Peel,   who   ilecided   on   the   facts, 
held  that  the  differences  between  the  home  and  the  im- 
port   rates  on   meat,  hops,  and  hay  were  not   justified.' 
While  his  colleagues  accepted  this  opinion,  it  was  with 
hesitation.    They  both  had  doubts  as  to  the  al!  -^cd  pref- 
erence on  meat,'  and  justly  so.    The  average  consign- 
ment of  foreign  meat  from    Southampton  was  37  tons. 
In  a  period  of  seventeen  months  10,638  tons  of  meat  were 
shipped  in  286  consignments.     On  the  other  hand,  from 
Salisbury,  the  leading   English  meat  centre  concerneu, 
231  tons  in  825  consignments  were  shipped  in  the  same 
period.     It  is  apparent  that,  where  the  whole  series  of 
costs  would  be  so  different,  the  Commission  strained  the 
idea  of  cost  of  service  to  the  breaking  point,  and  in  doing 
so  favored  the  home  producer. 

The  decision  was  based  on  the  idea,  manifestly  correct, 
that  it  was  the  intention  of  the  statute  to  eliminate  com- 
petition from  the  factors  to  be  considered.  At  the  same 
time  the  majority  of  the  Commission  are  satisfied  that 
the  real  factor  controlling  tlie  rate  situation  in  this  case 


lAfaiMion  Houte  cate,  38,  39. 


'  Ibid.  32  and  43. 


ESGLISH   RAILWAY   AM)   CAXAL   COMMLi.SKJX 


23 


is  water  competition.  As  was  said  by  Justice  Collins, 
there  was  "  no  reason  or  principle  in  leaving  out  of  account 
the  fact  of  a  rival  route  by  rail  or  water  from  the  point 
of  departure  to  the  point  of  arrival  in  the  case  of  poods 
from  abroad  and  taking  it  into  account,  as  it  clearly  may 
be  taken  into  account,  where  the  comparison  is  between 
home  goods  only.'" 

This  unsatisfactory  decision,  which  cost  the  traders 
£2,()00  in  law  costs,  obtained  no  general  principle  for  the 
traders,  and  at  the  same  time  forced  the  railways  to  depend 
upon  the  artificial  justification  of  cost  of  service.  While 
the  decision  is  of  such  a  nature  that  in  a  case  where  there 
is  real  competition  of  home  and  *'oreign  products  a  tliiTerent 
verf'^'-t  might  be  given,  no  further  action  in  regard  to 
prelevontial  rates  has  l)een  taken  before  the  Commission. 
In  1699  the  question  of  preferential  rates  was  brought 
before  the  Board  of  Trade  under  the  conciliation  clause, 
but  no  satisfactory  agreement  could  be  obtained." 

It  was  Mr.  Chamberlain  who  introduced  into  the  legis- 
lation the  clause  under  di-scussion.  The  agitation  in  re- 
gard to  preferential  rates  has  been  given  an  added  vigor 
by  his  preferential  traile  movement.  Back  of  nmch  of 
i.'ie  outcry  concerning  jjref_'rential  rates  is  a  hazy  protec- 
tionism. The  support  Mr.  Chamberlain  has  obtained,  for 
example,  in  the  iron  and  steel  industry  is  in  consiilcrable 
part  due  to  preferential  rates  on  i-'-n  and  steel  products, 
although  the  matter  is  complicated  by  the  export  rates 
given  by  the  railways  of  competing  countries.' 

The  control  over  docks  by  railway  companies,  which  was 


trr' 


'Manaion  Houte  ca»e,  32.  See  also  the  statement  of  Lord  Cobham  in  Didcot. 
Seu-bury  A  Smitham iiton  liij-  Co.  v.  (}rmt  Wcttrrn  Hy.  A  L.  <t  .S.  »'.  liy..  il  Ky. 
and  Canal  TratSo  Cases.  I'lO. 


'Case  JO,  Seventh  liejhtrt  o!  the  ISuunl  ///  T- 
1888. 


/".  under  Sertinn  31   of  the  Aet  of 


^See  Report  of  the  TtinlJ  Comm,t»,oii  (Cliambcrl.iin),  1904,  vol.  i.:  The  Iron 
and  Steel  Industry,  under  heailiiiK  "I'refeR^ntial  Rates."  Contra,  see  "British 
Kailways  and  Coods  Traffic:  Is  Preference  given  to  Foreign  Produ  'sV  "  A.  Dudley 
Evans,  Eaitwrnic  Jourmil.  March,  1905. 


M 


24 


QUARTERLY  JOURNAL  OF  ECOSOMICS 


objected  to  at  an  earlier  date  as  a  source  of  discrimination,' 
has  been  increasing  of  recent  years.    The  railways  have 
found  it  necessary  to  obtain  control  not  only  of  docks,  but 
also   of   steamer  lines  connecting  with    the   Continent, 
in  order  to  obtain  the  through  rates  which  are  necessary, 
if  the  import  and  export  traffic  are  to  balance,  and  thus 
permit  a  more  economical   use  of  rolling  stock.^    Com- 
plaint is  made  that  the  railways  arc  spending  large  sums 
in  erecting  docks  and  warehouses  at  ports  in  order  to 
encourage  foreign  trade,  thereby  still  further  increasing 
the  number  of  preferential  rates.    The  provisions  of  the 
Act  of  1888  with  reference  to  the  right  of  the  traders  to 
have    through   rates   from   foreign   points   distinguisheil 
into  their  domestic  and  foreign  portions  are  somewhat 
ambiguous.     In  the  Southampton  case  the  traders  were 
unable  to  ascertain  the  foreign  portion  of  the  rate.    As  a 
result  of  this  condition,  an  attempt  was  made  in  1904  to 
obtain  a  provision  in  a  special  railway  act,  requiring  that 
the  railway  should  distingijish  on  its  rate  books,  in  the 
case  of  imports  on  a  t.  rough  rate,  the  portions  attribu- 
table to  (1)  land  carriage  abroad,  (2)  dock,  harbor,  and 
shipping   charges   abroad,    (3)    conveyance   by   sea,    (4) 
dock,  harbor,  and  shipping  charges  at  the  British  port, 
(5)  railway  charges  in  the  United  Kingdom.     This  was 
voted  down  by  103  to  79  on  the  ground  that  it  was  unfair 
to  pick  out  a  particular  company  in  connection  with  what 
was  a  general  matter.' 
The  farmers  of  the  United  Kingdom  are  subject  to  com- 

> Section  27  of  the  draft  Keport  of  the  Setrrt  Commilire  of  1882.  p.  xxviii. 

'The  pmctioe  of  consinninK  K'kHs  on  throunh  rales  i«  increasing.  .\t  the 
same  time  Continental  railways— c.»..  those  of  Belgium— refuse  to  loake  th-viunh 
rates,  except  with  railway  rotiipanies.  .\s  to  the  allegcil  evil  effects  of  such  ar- 
ranRements,  see  remarks  of  Mr.  Hanbury.  president  of  the  Br„inl  of  ARricullure, 
Hansard.  I9()2.  fourth  series,  vol.  cviii.  p.  1640.  See  also  Bo\l,>  unil  Waghorn, 
op.  fit.,  vol.  i.  p.  .^04. 

'Lancashire  ami  Yorkshire  Railway  Hill.  For  text  of  the  Instruction  see  Han- 
sard. I'.KM.  fourth  .scries,  vol.  131.  p.  1473. 


« 


wmk 


EXGUSII   RMLUAY   AXD  CANAL   COAfMISSIOX         25 

petition  from  many  points.     To  cite  but  a  few  examples- 
AJgenan    fruit    and    vegetabjps,     French    hops,    Danisli 
butter  and  eggs,  compete  with  tiic  home  products.     The 
hop  rates  complained  of  when   President  Hatlley  wrote 
still  exist.     Not  only  do  the  English  farmers  complain 
of  preferential  rates,  there  is  also  complaint  from  Ireland 
that  the  existing  rate  basis  discriminates  against   Irish 
eggs,  butter,  and  bacon.     It  should  be  noted,  although 
such  a  consideration  is  ruled  out  by  the  Railway  Com- 
mission, that  the  low  rates  complained  of  are  balances 
of  through  rates.     It  costs  about  £10  for  freight  charges 
to  place  one  ton  of  Algerian  fruit  or  vf>getables  in  London. 
In  fruit  shipments  the  foreigners  have  had  the  advantage 
that  a  considerable  number  of  the  British  growers  are  not 
giving  suflicient  attention  to  grading  and  packing  and,  in 
general,  to  the  requirements  of  consumers.     The  follow- 
ing may  be  taken  as  examples  of  the  complaints  in  regard 
to  Danish  competition: — 


(mixed  route). 
Esbjeru  (Denmark)  to  Birmingham         553  miles 
Esbjeru  (Denmark)  "  "  553 

Armagh  (Ireland)      ••  "  35;^ 

Annasb  (Ireland)      "  "  353      •< 


Commodity.     Hate  per  ton. 


butter 

egga 

butter 

eggs 


47«.  M. 
.■is..  8rf. 
42».  tirf. 
50».  Od. 


The  apparent  disparity  of  rates  on  a  distance  basis  di.s- 
appears  when  it  is  remembered  that  on  the  Danish  products 
there  is  a  long  water  haul,  and  that  there  is  also  the  dif- 
ference between  a  car  lot  and  a  less  than  car-lot  basis. 
The  Danish  rates  are  quot?:'  -i  minimum  consignments 
of  ten  tons,  while  the  Irish  rates  are  based  on  three  hun- 
dredweight. 

The  more  enlightened  FJnglish  farmers  recognize  the 
effects  of  water  competition.  They  know  tliaf  it  would 
not  benefit  them  to  have  the  through  rat.;  raised,  as  it 
would  simply  mean  that  the  foreign  produce  would' move 
more  cheaply  by  an  all-water  route      ■When  the  London 


r 


26  QUARTERLY  JOURNAL  OF  ECOSOMICS 

&  South-castprn  Railway  in  1887  i)laeiMl  foreign  hops  on 
tlie  same  rate  l)a.«is  as  domestic  liups,  the  result  was  that 
the  former  moved  by  water  to  Loudon.  The  English 
producer  was  injuriously  affected  by  the  increased  com- 
petition which  lowered  tlie  price.  At  present  appr()xi- 
mately  90  per  cent,  of  the  Continental  produce  im- 
ported by  way  of  Boulogne  antl  Calais  goes  by  water  to 
London.  \\'hile  the  farmers  recognize  the  superior  facil- 
ities for  handling  foreign  goods,  they  at  the  .same  time 
consider  that  the  disparity  between  home  and  foreign 
rates  is  too  great.' 

Some  part  of  the  complaint  in  regard  to  preferential 
rates  is  attributable  to  misunderstandings  in  regard  to 
rate  conditions  as  well  as  to  a  lack  of  initiative  on  the  part 
of  the  farmers.  The  Royal  Commission  on  Agriculture 
stated  in  1S97  that,  while  co-operation  among  fanners 
was  necessary  in  order  to  obtain  lower  rates,  this  matter 
could  not  be  helped  on  by  legislation.'  But  little  has  been 
done  by  the  farmers  to  accomijlish  this.'  While  there  is 
much  unorganized  complaint  in  regard  to  agricultural 
rates,  the  fanners  are  presenting  very  little  evidence  before 
the  Departmental  Committee,  wliich  is  at  present  investi- 
gating the  matter.  The  railways  have  been  more  willing 
than  the  farmers  to  co-operate.  For  forty  years  the  Lon- 
don &  North-westeni  has  been  collecting  small  consign- 
ments of  agricultural  produce  along  its  lines.  These  it 
forwards  in  bulk,  delivers  them  to  the  London  salesmen, 
pays  market  dues,  collects  the  proceeds  from  the  sales- 
men, and  forwards  the  balance  to  the  shipi)ers.  The 
London  &  South-western,  which  does  a  large  business  in 

l/v.r;,.  evidence  of  W.  W.  Berry,  a  prominent  hop-nrower  ot  Kent ,  before  the 
Royal  Commiuion  on  Agricultural  Depre„io„.  1X97,  answers  to  que.t.on»  49,190, 
wXo.  49,258,  See  aho  statement  of  Mr.  Sinclair,  Hansard,  1904,  fourth  series, 
vol.  136,  p.  29.i. 

'  Final  Report,  p.  529. 

3See  statement  of  the  president  of  the  Board  of  ,\Kriculture,  Hansard,  1902. 
fourth  seriea.  vol.  10,H.  p.  1039. 


ESaUSII   RMIAVAY   A\D  r.l.V.U.   COM.UISSlnX         -jj 

Vnvkniiv  freight,  undertook  roconfly  to  supply  the  fiirniers 
aloUK  its  lines  with  r..pi,.s  of  Pratt's  The  Oujanuation 
of  Arjrvulture.  All  of  the  railways  have  heeu  active  in 
giving  special  rates  to  encourage  agricultural  shipments.' 
Hut,  while  the  Danes  are  shipping  [jroduce  into  Jinghuid 
on  relatively  low  rates,  which  are  the  result  „f  c(M.perali(.n, 
70  per  cent,  of  the  domestic  agricultural  shipments  on' 
the  Nortli-(.astern  Railway  are  below  three  hundredweight, 
and  (KJ  [wr  cent,  fall  below  one  ton. 


IV. 

CONTKOL   OVEli   AcTIAL    HaTKS. 

In  dealing  with  the  rate  policy  of  the  Conunission,  a 
distinction  must  bo  made  between  the  period  prior  to 
1894  and  that  subsecpient  thereto.  Though  it  ha<l  been 
stated  in  1872  that  legal  maximum  rates  afforded  but  little 
real  protection  to  the  public^*  the  svstein  was  continued 
by  the  Act  of  1888.  While  the  work  of  tlu>  Hoard  of  Trade, 
as  embodied  in  the  Provisional  Orders  Acts,  meant  in  all 
cases  the  systematization  and  in  many  cases  the  reduction 
of  the  maxima,  the  outcome  was  not  satisfactory  to  the 
traders,  some  of  whom  wanted  a  general  n-duction  of 
rates,  regardless  of  the  cost  to  the  railways.  The  change 
of  status  in  regard  to  reasonable  rates  introduced  by  the 
Act  of  1888  was  more  apparent  than  real.  The  former 
Railway  Commission  had  stated  that,  in  addition  to  there 
being  a  necessity  that  rates  charged  should  be  within 
the  maximum,  there  was  also  the  added  requirement  that 

1  For  full  (lelail  concprnin?  tiip  special  :',rranKeinent!.  made  liv  Hrilish  rail- 
ways in  ,h,s  regard  see  liailwuu  liat»  and  facilu.e,.  cof.y  of  corr,'..|,„ndenee  he- 
twee.,  the  lioanl  of  Asriculture  at.d  Fisheries  and  the  Kailway  Companies  of  Creat 
Br.tam.  e.n.,  H.04.  A  large  nun.ber  of  .leta.l.  bearmg  „n  the  quesiion  of  prefer- 
ential rates  will  be  foun.l  in  I'rMf^Railuaw  a,ul  their  Kale,.  Tin.  hook  has  come 
to  hand  since  the  material  contained  in  this  section  was  .-et  up. 

Jlieportoi  the  JouU  Select  Committee  on  ItaUu.au  CcmparaeB  Amuluamatian. 

lo7J,  p.  XXXIV. 


28  QUARTERLY  JOURS AL  OF  ECOSOMICS 

they  must  he  rpa^«nabl<^'  No  IcruI  action  had  been  taken, 
however,  in  regard  to  this  matter.  Two  juciicial  decisions 
given  in  \^K\  and  in  1887  seemed  to  uphold  the  position 
that  a  maxinnim  rate  sanctioned  by  Parliament  was  con- 
clusively reasonable.'  Hut  the  statements  in  these  deci- 
sions are  simply  dicta,  since  the  cuestion  of  reasonable- 
negs  of  rates  was  not  directly  involved.  The  Act  of  1888, 
however,  settled  that  the  maximum  rate  wa.'^  conclusive 
of  reasonablenes-s.* 

At  the  outset  of  its  work  the  only  way  in  which  the 
Commission  was  brought  in  touch  with,  rates  was  through 
thj  provisions  concerned  with  undue  preference  and  with 
through  rates.  The  Commission  will  not  state  before- 
hand that  a  rate  is  preferential.*  One  of  the  conmiission- 
ers.  Sir  Frederick  Peel,  has  taken  the  position  that  certain 
powers  over  actual  rates  were  given  to  the  Commission. 
He  has  construed  the  statement  in  the  "  unilue  preference"" 
clause  which  tlirects  the  commissioners  to  consider 
"  whether  the  ineciuality  cannot  be  remedied  without  un- 
duly reducing  the  rate  charged  to  the  complainant"  to 
give  a  power  of  reducing  the  higher  rates.'  Concern- 
ing this  interpretation  there  is  .some  doubi.  Justice  Wilis 
holds  that  the  words  in  ciuostion  do  not  confer  any  rate- 
making  power,  but  simply  indicate  the  circumstances  to 
be  considered."  In  an  Irish  case  in  1897,  in  which  the 
question  of  distributive  rates  was  involved,  it  was  held 

iJi'ouri;i  lieporl  of  the  Uadwaij  fnmmiuiinnrra.  p.  «,  Section  U. 

2Se-  M,imt,e>ter.Shr,iiehl  <{-  l.inrnhMire  Co.  v.  Brown.  »  App.  V:x<.  71.^..  and 
Ore,U  \Ve,lrrn  Ho'uay  Co.  v.  .\lcC„r,h„.  12  App.  Ca-.  21H.  In  the  latter  case  Lord 
W.;t»on  took  the  position,  ••Pnmo  farie.  I  an,  ..rrpared  to  hold  that  a  rate  sanc- 
tioned by  the  legislature  mu»l  i>e  taken  to  be  a  reasonable  rate." 

-See  Art  of  I SSS.  Section  24,  Sub-section  (1.  and  Sub-sect.oii  10.  Htport  of 
Board  ol  T.Mit:.  1S90.  nn  Ciiuiiliration  of  Merrhandite  Traffic,  etc..  p.  17. 


* /n  re  TafT  Vale  Hy.  Co.    11  hy.  and  Canal  Traffic  Canes 


•SU. 


'Note  his  dissenting  opinion  ir.  the  Liverpool  Corn  Traders'  Ass,jciation  case 
in  l(<i)2. 


»2uH. 


t'SeUct  ComtnUtee  on  Railway  Half  and  Charge,.  LH93,  answer    to   question 


ESGUSir   RMIMWy     l.V/J   r.lVl/,   rO.\f.UISSKt\         29 

that  tho  rntp  to  the  shorter  distance  point  should  l)e  .V. 
per  ton  less  than  the  rate  to  the  lonp-r  distaiiee  point. 
but  no  attempt  was  made  to  determitie  the  lonjrer  distaiiee 
rate.'     In  HKK)  a  temporary  redueti.m  of  a  canal  toll  was 
directed.^'     Howev,  r,  it   eaiuiot   he  .s\id  that  the.se  deci- 
sions have  estal)lislied  the  power  of  the  f'onimission  to 
reduce    rates    under   the    undue    preference    elau.se.     .<ir 
Frederick  Peel  also  holds  that   the  Commis.sion  may  fix 
a  through  rate,  no  matter  what   the  railways  concerned 
may  have  agr«-ed  ui)on.     While  this  matter  has  not  '.h-en 
passed  on,  the  weight  of  opinion  is  against  such  an  inter- 
pretation.'   It  wouM  appear,  although  this  also  has  not 
been  passed  upon,  that  the  Commission  has  no  power  to 
test    the  rea.sonableness  of  an  established   through   rate. 
"While  the  Commis.sion  has  power  to  fix  a  through  rate, 
if  the  parties  do  not  agree,  it  would  appear,  although  tliis 
is  a  moot  point,  that  it  has  no  power  to  apportion  such 
a  rate.*    The  Commi.^sion  stated  explicitly  in  1S95  that 
it  had  no  power  under  the  Act  of  18S8  to  inquire  into  the 
reasonrbleness  of  a  particular  rate.''    The  .arious  reduc- 
tions of  rate  which  have  been  ordered  n.  connection  with 
the  workmen's  trains  applications  are   given    under    an 
entirely  different  jurisdiction.' 

In  the  matter  of  group  rates  there  has  been  some  con- 
flict between  the  English  and  the  Irish  decisions.     The 

1  rnmVi/n-ffu,  Harbor  Commitiioneri  and  Other,  v.  Beifatt  Sarthrrn  founht, 
Hy..  10  Hy.  and  Canal  Traffic  Cuwh.  74. 

'  Fairveather  J:  Co.  and  Other,  v.  Corporalwn  nl  York.  II  Hy.  and  Canal  Traffic 
Cases.  201. 

'  Kvidenee  before  .Select  Committee  of  189.1,  annwera  to  que.<iion^  7!Mi.t,  7Wi4 
790f..  See  al.«.  the  extremely  (tuarded  statement  of  Justir*  Will.  IW..re  the  ,ai  le 
committee,  answer  to  que^ition  8264. 

<Thi»  point  was  rained  in  the  Forth  BridRe  ease,  11  Ry.  and  Canal  Traffic 
Cases.  5.  but  was  not  paf".ed  u[>on. 

^^     'lVe,t  Ham  C„r,H,ralion  v.  Great  EaUern  Ry..  9  Ry.  and  Canal  Traffic  CawK. 

^E.a..  In  re  London  Hefnrm  Union  v.  Great  KoMtern  Ry.  10  Hv.  ami  Canml 
Traffic  Cases,  2.80      Wee  Fercu*""!   p^.'.-t- p- -,)*«  .^  /  n  t i-- 


30 


QVAHTEHIY   JOVHSM.  OF   KCOXOMiCS 


formpr  rocard  cotniM'tition  and  convciiii'iicc  as  tlic  riioHt 
i!n|M)rtarit  fartors.  Tlu"  latter  lay  more  stress  on  ilistaiiee. 
The  appeals  from  the  Comnimsion  have  settled  tiiat  coni- 
|)etiti(m  is  as  ini|K)rtnnt  a.  factor  in  connection  with  rates 
as  geojjraphieal  position. 

The  (lue-stion  of  the  reasonableness  of  partieiilar  rates 
was  suddenly   Sroupht    before  the  Coininission   in    18HL 
The  adjustments  necessary  in  jjiittinn  into  force  the  rates 
under  the  revised  maxima  were  jireat.     The  fact  that  fully 
one-half   of   the   traffic   is   carried   on   exceptional    rates, 
which  are  Iwlow  the  class  rates,  still  further  complicated 
matters.'     At  the  same  time  there  was  an  a|)parent  desire 
on  the  part  of  some  of  the  railways  to  give    'le  traders  an 
objpct-les.son  in  regard  to  the  disadvantages  of  the  legis- 
lative   intervention    which    had    brought    some    maxima 
below   the  actual   rates  formerly  charged.     And   so  the 
maximum  cla.s.s  rates  were  published  as  the  actual  rates 
effective  January   1,   1893.     The  outcry  which  followed 
(piickened  the  work  of  ailju.stment,  and  led  to  an  under- 
taking on  the  part  of  the  railways  that  the  rate  increase 
should  not  be  more  than  5  per  cent.     But  this  did  not 
prevent   the  enactment   of  a  piece  of  panic  legislation, 
pas.sed    hurriedly   and   without   due   consideration.'     Hy 
this  act  it  was  provided  that,  where  rates  were  directly 
or  indirectly   increased   after  December  31,    1892,   they 
were  prima  facie  unreasonable.     The  fact  that  the  rate 
complained  of  was  within  the  maximum  was  not  to  be  a 
justification  of  the  increase.     The  Commission  was  given 
power  to  deal  with  complaints  arising  under  this  act,  sub- 
ject to  the  provision  that  an  application  was  first  to  be 

'  For  detail  concerning  these  rate"  see  "Report  on  the  Question  nf  Slow  Freights 
(Ennlan.l)."  by  Henry  Sniart,  Bullttin  of  Ihr  International  Kaihcau  Cnnwi-M. 
July.  1904. 

'A  mas.,  of  .letail  pro  and  con  will  be  found  in  the  evidence  attaclied  to  the 
Report  of  the  Select  CommiUee  of  1H»;).  Se»  also  Muvor.  •The  l.iinliih  Ilailway 
Rate  Question,"  Quarterly  Journal  of  Ernnomici,  .\pril,  1894;  Acworth,  The  Ele- 
mentM  of  Railwau  Economict.  pp.  H7-l.'>4. 


Ksai.isii  HMLW  \y   \sn  r.iv.i/.  royrxfissiox 


31 


niiulo  t(i  the  Hoard  of  Tmlo.  Over  wvpritoon  huad'  ,( 
complaints  werr  bioiiKht  iM-fcro  tho  Hoard  of  Trade  (m>- 
twcrn  the  duto  of  tin-  jmssanc  of  the  act  and  tlir  end  of 
Fohniary,  1S95. 

In  the  investigations  leading  up  to  the  Provisional 
Ordorx  legislation  the  trad.-rs  had  all  ah.ng  Ix'en  desir- 
ous of  having  the  actual  rates  serve  as  tnaxirna.'  The 
evident  intention  of  the  majority  of  the  memlwrs  of  the 
Select  Conunittep  of  I, SOU  was  tjiat  the  rates  in  force  at 
the  end  of  1S02  should  he  the  maxima. 

In  taking  up  the  new  functions  imposed  hy  the  revo- 
lutionary Act  of  !,s<)4,  the  Commission  ha.l  a  full  appre- 
ciation of  tl  tliculties  of  the   new  jurisdiction.     .lu.s- 
tico  Collins  said,  "I  caimot  .suppo.se  that  Parliament  in- 
tended to  take  the  management  of  the.s<'  great   trading 
cr)mpanips  [the  railways]  (,iii  of  the  hands  of   the  practi- 
cal men  who  work  them,  and  to  place  it  in  the  hands  of 
the   Railway  Commissioners."    The  Conunission    had  no 
intention  to  exercise  a  rate-making    power.     It   was  its 
intention    to    construe    the    legislation    strictly.     In    the 
interpretation  of  t!ie  .statute  there  was,  however,  a  dif- 
ference   of    opinion    between    the    coituni.ssion.'is.     Lord 
Cohham  held  that   the  Conmii.ssion  was  not  con.peteiit, 
of  its  own  knowledge,  to  .say  whether  a  rate  was  rea.son- 
able  or  not.     "\o  tribunal,  however  expert,  would  imder- 
take  to  .say  that  a  (i.s\  (W.  rate  for  the  carriage  of  coal  from 
Derbyshire  to   London   is   rea.'-onable,    but    that   (i.-.   OJrf. 
is   unrea.^onabie."     The   legislature   had,    however,   given 
a  standard  of  rea.sonablene.ss  in  the  rate  of  l.slL',  and  the 
rate  could  not   he  increased  above  this  unless  good  rea- 
sons were  shown.'     In  endeavoring  to  obtain  some  defi- 
nite standard  of  measurement  of  reasonableness,  the  Com- 

'  A-.u..   M,p,.cli  of  J.   ».  Balfour   lirnww.  already  cite.!,  p.    171.      Kvi.l.nre  of 
Mar^shull  >t,.ven,  l,ef.,re  the  Select  C.mmittce  of  l>i9;).  aii»wer»  to  nue»ti.,n,  2UH  and 

in7.' ""''"'  ■"''"""""  '■""'  <""••  '-W-  V.  Muitand  Ry..  9  Ky.  an.l  Cai.al  Traffii;  Ca«ei, 


sAWw^,' 


■0^5*'         5^1. 


WUk^ 


32 


QUARTERLY  JOURNAL  OF  LCOXOMICS 


mission  ruled  out  all  reference  to  competition,  or  to  that 
more   inclusive   system,   charging   what    the   traffic   will 
bear.'    The  opinion  of  the  traders,  that  the  rates  in  force 
at  the  end  of  1892  should  be  maxinnun  rates,  received 
a  partial  support  from  Lord  Cobham,  who  held  that  the 
fact  that   a  rate  had  not   been    increased  prior  to  1892 
created  a  strong;  presumption  against  the  railway  because 
it  had  not  increased  the  rate  when  it  had  the  unchallenged 
right  to  do  so;^  but  Justice  Collins  held  that  conditions 
prior  to  1892  could  be  considered,  and  that  the  reason- 
ableness of  a  rate  was  to  be  tested  by  conditions  existing 
or  apprehended   before   the  legislation   came  into  force.' 
Later  decisions  have  taken  into  consideration  conditions 
subsetiuent  to  1894.''     There  still  remained  the  (luestion 
of  the  criterion  of  reasonableness.     Justice  Collins  held  that 
this  should  be  cost  of  service.     Reasonableness,  he  held, 
nmst  be  measured  by  reference  to  "the  service  rendered 
and  the  benefit  received."     This,  in  his  opinion,  pointed  to 
cost  of  ser  'ice  as  the  base,  because  "the  service  rendered 
and  the  benefit  received  was  unaffected  by  the  [)rosperity 
or  misfortune  of  the  parties   to    the    contract.'"^    This 
sciuared  with  the  views  of  the  traders,  who  held  that  the 
true  basis  of  a  rate  was  cost  of  .service."    The  fact  that  the 
legislation  provided,  in  the  first  instance,  a  rate  of  an  ante- 
cedent period  as  a  criterion  of  reasonableness  would  seem 
to  .show  an  intention  of  ruling  out  in  the  present  rate 

'E.g..  ChnrUu-  and  Sarrtlinn  Cnliriril  Co.  v.  .Vorth-tattrrn  Ry..  9  Ry.  and 
Canal  Traffic  Cases.  140.  In  lilurk  A  Son»  v.  Paledonian  Uy..  ftr..  U  Ry.  and 
Canal  Traffic  I'a^-a.  17('  ihe  Court  of  Sessions  refused,  on  appeal,  to  grant  the 
process  which  would  eimljle  the  railway  companies  to  investinale  the  liooks  of 
the  applicants  to  see  what  I  heir  prohts  had  been  .luring  a  given  pe-iod. 

'  Derby  Silkitone  Coa'       .  ra«e,  l.'tO.  Mbid.p.lll. 

'E.g.,  Black  it  Sum,  ut  tufira. 

^Dmby  Silktione  cote.  Illi.  The  <leci,sion  in  this  regard  is  ba.«ed  on  Can- 
ada Southrrn  Uy.  Co.  v.  Inirrnnlional  Bridge  Co..  8  App.  Gas.  731,  732. 

»E.g.,  letter  of  .Sir  James  Whiteheail.  president  of  the  Mansion  House  Asso- 
ciation, London  Timel.  December  22,  1S92;  also  speech  of  J.  H.  Balfour  Brown* 
ut  »«/»'•<?.  !>-  ^•'»7. 


*ffi-- 


ENGLISH  RAILWAY  AXD   C.l.V.l/.   COM.XflSSlOX         33 

any  consideration  of  what  the  traffic  won'  !  boar;  for, 
if  ciiargiiifr  \vhat  the  traffic  would  he.-  m  i^c  nn->'U,' 
were  admitted  as  a  present  criterion  i'  nv.soiia'nien":.  , 
it  is  difficult  to  see  how  the  past  ratt  co^n:]  serve  u  a 
standard  of  reasonableness,  when,  presu:  .S.^  v. -lat  the 
traffic  would  bear  was  soniethinji  essentially  different. 

The  increases  in  rate.s  complained  of,  which  have  for 
the  most  part  arisen  in  connection  with  coal  traffic,  have 
in  a  number  of  ca.ses  been  indirect,  attributable  to  de- 
crea.«os  in  the  allowance  made  for  wastaj^e  in  the  coal 
traffic,  etc.  The  criterion  the  Commission  has  found  it 
neces.sary  to  adhere  to— cost  of  .service— has  tied  it  down 
to  an  arbitrary  arrangement.  To  meet  this  condition, 
the  railways  have  had  recourse  to  technicalities  savoring, 
in  .some  instances,  of  subterfuge.  In  one  ca.se  it  was  al- 
leged that  the  increa.se  complained  ..f  was  attributable 
to  an  increa.se  in  the  cost  of  cartage  as  distinguished  from 
conveyance  charges.  The  former  fell  under  terminal 
services,  over  which  the  jurisdiction  of  the  Commission 
was  limited.' 

No  general  principle  has  been  established  in  the  unrea- 
sonable rate  cases.  The  railways  had  claimed  the  right 
in  1893  to  increa.se  the  rates  by  r,  per  cent,  as  compared 
with  the  rates  in  force  in  1892.  While  the  traders  never 
recognized  the  validity  of  this  claim,  the  Board  of  Trade 
by  1898  had  accepted  this  arrangement  as  justifiable. 
The  important  Smith  and  Forrest  ca.se,  which  came  up 
in  1899,  was  intended  to  test  this  arrangement.^  Com- 
plaint was  made  by  the  oil  refiners  of  Liverpool  and  Man- 
chester that  an  increase  of  5  per  cent,  was  unrea.sonable. 
The  increase  was  in  part  direct,  in  part  indirect,  attributa- 
ble to  decreases  in  cartage  rebates.     Tiie  matters  involved 

K\fan,ion  Howie  AuoHation.  etc.  v.  L.  &  \.  W.  Ry..  9  Ry.  aiul  Canal  Traffic 
V^"'  ■  ,,m   ''**  "P«':"J'y  the  remarks  of   Lord  l>her  in  the  appeal  proceeding., 


156. 


2  Smith  *  Fanett  v.  L.  *  ;V.  W.  Ru.  and  Other:  1 1  Ry.  »nH  r,ns!  Traffic  Cases. 


34 


QUARTERLY  JOURNAL  OF   ECONOMICS 


wore  pertinent  to  the  whole  freight  traffic  of  the  United 
Kingdom,  and  affected  future  as  well  as  past  rates.  The 
railways  introduced  statistical  evidence  showing  that, 
because  of  various  increases  in  cost,  particularly  in  the 
case  of  labor,  expenses  were  5.1  per  cent,  higher  in  1892 
than  in  1888  and  6.3  per  cent,  higtier  in  1898  than  in 
1892.  The  railways  desired  to  carry  the  conipari.sons 
back  to  1872,  when  many  of  the  old  rates  had  been  fixed; 
but  the  Commission  considered  1888  a  sufficiently  re- 
mote date,  and  comparisons  were  made  with  the  condi- 
tions of  1891.  It  was  found  that  an  increase  of  3  per  cent, 
would  be  justified.  The  Commission  has  thus  shown  its 
intention  to  look  at  each  case  by  itself.  If  a  5  per  cent, 
increase  should  be  found  justifiable  in  a  particular  case, 
it  would  not  necessarily  have  any  bearing  on  a  later  de- 
cision. 

The  desire  of  the  Commission  not  to  engage  in  any 
rate-making  experiments  has  kept  it  from  making  any 
statements  as  to  general  rates.  It  has  concern.  1  itself 
with  the  reasonableness  of  particular  rates.  The  Com- 
mission has  painstakingly  endeavon^d  to  get  at  the  cost 
involved.  The  decisions  have  been  compromises.  Where 
decisions  have  been  against  the  railways,  damages  have 
been  awarded  on  th(>  basis  of  the  dift'erence  between  the 
increase  and  what  was  deemed  a  justifiable  increase; 
and  the  railways  have  been  ortlered  to  desist  charging 
the  unreasonable  rates.  In  a  recent  case  an  attempt 
was  made  to  obtain  an  expansion  of  the  unreasonable 
rate  jurisdiction.'  It  \\as  contended  tliat  it  was  unrea- 
sonable to  increase  a  rate,  altliough  the  increased  rate  was 
still  below  the  point  to  which  it  had  been  decreased  in 
1894.  The  Commis.'^ion  did  not,  however,  i)ass  upon 
this  question.  It  is  apparent  that,  if  such  a  contention 
were  accepted,   still   more  rigidity   would   l)e   introduced 

1  Xt ilium  A  Askiim   llemiitile  Iron  Co.   v.   Furneu  Ky.  anil  Ol/ier^,  rep<  rted  in 
liatiti-au  Timm,  .January  'Jl,  lltu.t. 


ENGLISH  RAILWAY  AXD   C.WAL   COMMISSIOX         35 

into  the  system.  The  traders'  jinticipation.s  as  t(.  tlie 
effec;  of  the  Act  of  1894  have  been  nullified  by  the  will- 
ingness of  the  Coinniission  to  consider  conditions  ante- 
cedent to  the  legislation.  The  whole  position,  it  must 
be  recognized,  is  an  exceedingly  artificial  one.  While 
the  position  taken  by  the  Commission  is  strained  and 
un.satisfactory,  it  is  difficult  to  see,  when  it  was  specifi- 
cally referred  back  to  the  conflition.s  of  1892,  what  other 
method  it  coul<l  have  adopted.  By  acting  as  it  has, 
a  degree  of  elasticity  has  been  retained  for  the  proce.s.s 
under  the  legislation  which  it  otherwise  would  not  have 
possessed.' 


It  was  objected  at  the  outset  tliat  the  judicial  member 
would  dominate  the  Conmiission,  owing  to  the  difficulty 
of  distinguishing  between  law  and  fact.  It  has  happened, 
however,  that  in  the  performance  of  their  duties  tiie  lay 
members  determine  on  (piestions  of  ■\  At  the  same 
time,  while  the  opinion  of  the  ex-  .  munissioner  is 

final  on  a  point  of  law,  the  lay  me,  also  form  and 

express  their  opinions. 

The  government  has  throughout  considered  the  re- 
quirement that  one  meinl)er  of  the  Commis.sion  -hall 
"be  experienced  in  railway  business"  to  mean  tliat  he 
shall  have  been  a  railway  (hrector  or  a  railway  manager.^ 
Exception  has  been  taken  to  this  by  the  traders.  To 
the  attempt  to  obtain  a  business  represc  'five  on  tiie 
Commission,  in  addition  to  a  railway  ref  ..-.-sentative,  the 

u.^JIi'Ti''"'"'";''!'""""'  '"""'""  ""■  ''"'■""'-'""  '»•  C.rinlinK.in  Ur.h.h  RaU- 
nav>  a,  Bu„ne„  b.nlerpr,,,,.  pp.  l,|-|(j:i,  contain,.,!  i„  Ashley'.  lirrH.h  Irui,^. 
<rie»,  IS  not  wholly  juslifieil. 

'.Mr.  Pricp.  before  his  «t,|,ointt,ient  to  the  Cotninission  of  IM7;i.  ha.l  be,.n  chair 
man  „f  the  M„lh»„l  Ha,_lway.  Viscount  Cobhan,,  who  sucoee.le.i  .Mr.  I'r.ce  in 
1891,  ha.l  been  .leputy  chairman  of  the  (Ireat  Western.     On  Viscount  rol,h-.,n'B 

'Z'TTL.      /  '"  '*■[  '"■"-'"'"  ''""■  '"*  *"■-  ■""■'•^■I'-.l  by  Mr.  (lathorne-Hardy 
fTii — aj  --trt:..  ..(.,....  .  .,„.ri„„n  "1  fhr  ?r-mfri-i'a?tcrn. 


i^^l 


36 


QUARTERLY   JOURS. \L   OF   ECOSOMICS 


railways  are  not  opposed.  It  's  from  tlie  fiovonimont 
that  the  objection  has  como.  ^ir.  Murulelhi,  when  presi- 
dent of  the  Board  of  Trade,  said  he  would  be  glcd  to 
appoint  a  "really"  business  man  who  should  be  un  im- 
partial authority,  fairly  representative  of  the  trading 
class.  Mr.  Mundella  had  stated  that  the  Commi-ssion 
as  then  constituted  was  generally  unsatisfactory.'  An 
attempt  was  made  by  the  traders  in  1S04  to  so  amend 
the  legislation  that  one  of  the  commi.'isioners  should  be 
"experienced  in  trade  or  commerce."  This  was  not 
pressed  beyond  the  first  reading.^  Mr.  Bryce,  who  suc- 
ceeded Mr.  Mundella,  held,  however,  that  no  such  restric- 
tion as  his  predecessor  had  favored  should  be  placed 
on  the  choice  of  the  government.  The  desire  to  have  a 
commercial  representative  is  still  active.  Believing  that 
the  commissioners  should  be  assessors,  possessed  of  ex- 
pert knowledge,  rather  than  judges,  the  traders  have 
urged  that  the  terms  of  the  con)r'-  ioners  should  not 
exceed  ten  years,  so  that  there  might  be  an  opportunity 
*o  keep  constantly  in  touch  w^ith  actual  conditions. 

Looking  at  conditions  as  they  are,  it  is  apparent  that 
the  presence  of  a  railway  representative  on  the  Commis- 
sion has  meant  that  those  appearing  before  it  have  been 
more  careful  to  give  essential  details.  There  is  no  real 
cause  for  complaint,  from  the  traders'  standpoint,  con- 
cerning the  services  which  the  lay  members  have  per- 
formed. The  railway  representative,  for  example,  in 
the  enforcement  of  the  legislation  of  1894  has  followed 
very  closely  the  ideas  favored  by  the  traders.  Sir  Fred- 
erick Peel  has  been  willing  to  give  a  broad  construction  to 
the  legislative  provisions  concerned  with  control  of  rates. 

The  average  English  trader  asks  for  a  process  which 

1  Hansard,  1894,  fourth  series,  vol.  28.  pp.  792.  793. 

'The  text  of  this  bill  will  be  found  in  the  Railway  Time$,  June  16,  1894,  p. 
7S2.     .S«<  alun  Rrpnrt  nj  the  Select  Comrr.iaee  of  1S93.  D    xiii. 


i 


ENGLISH   RAILWAY   A.\D  CANAL   COMMISSION         37 

shall  be  "short,  sharp,  and  decisive."  And  to  him  the 
process  of  the  Commission  has  undoubtedly  been  unsat- 
isfactory. As  a  minimum,  six  weeks  elapse  between  the 
filing  of  the  application  and  the  decision  of  the  case.' 
In  a  number  of  eases  more  than  a  year  has  elapsed  between 
the  initial  hearing  and  the  decision.  In  some  ca.ses  the 
delays  are  attributable  to  adjournments  in  order  to  per- 
mit the  obtaining  of  more  evidence.'  In  other  ca.ses,  de- 
lays have  been  caused  by  an  endeavor  to  get  the  parties 
to  settle  the  cjuestions  in  dispute.  When  cases  are  ap- 
pealed, there  are  further  delays.  While  one  case  has 
been  decided  on  appeal  within  two  months  after  the  de- 
cision of  the  Commission,  the  usual  period  is  from  six 
months  to  one  year. 

Notwithstanding  the  assumption  in  1887,  that  giving 
a  locus  standi  to  governing  bodies  and  to  traders'  asso- 
ciations would  cause  much  litigation,  the  number  of  com- 
plaints is  not  great.  In  the  period  1889-1903  there  have 
been,  on  the  average,  fifty  applications  a  year;  but  many 
of  these  have  been  of  minor  importance.  In  the  same 
period  there  have  been  on  the  average  twenty-three  de- 
cisions a  year.  But  here  there  are  many  cases  where  one 
decision  covers  a  group  of  identical  cases.'  Complaint 
has  been  made  of  the  small  number  of  days  on  which  the 
Commission  sits.  In  the  nine  years,  1896-1904,  the  av- 
erage period  the  Commission  has  sat  annually  as  a  court 
is  thirty-two  days.  This,  it  is  true,  is  exclusive  of  the 
days  when  the  Commission  has  sat  to  consider  applica- 
tions for  sanctioning  working  agreements  between  rail- 
ways, the  time  taken  up  in  connection  with  the  admin- 
istrative duties  of  the  Commission,  and  the  days  on  which 

'The  Rules  tjf  Prricc.iure  of  the  Commission  allow  twentv-onp  days  after  the 
filing  of  the  application  for  the  filing  of  replies, 

^E.a..  the  important  case  of  Spillers  A  Bakers,  etc.,  was  heiiril  first  December 
9  anil  10,  1903.  n  waa  then  ailjourned  for  further  evidence,  ami  wan  decided  in 
July.  1904. 

2;<et,'  Table  I. 


38 


QUARTERLr  JOUIiXM.  OF   ECOXOMICS 


the  registrar  of  the  Commission  has  iiu|uire(l  into  diim- 
ag'^s  and  interlocutory  proceedings  which  wouhl  other- 
wise come  before  the  commissioners  acting  as  a  court. 
Of  these  no  record  is  kept;  hut,  after  making  all  allow- 
ance, it  is  apparent  that  the  Commission  is  not  over- 
worked. It  is  apparent,  however,  as  has  been  recognized 
by  the  traders  themselves,  that  the  mere  enumeration 
of  the  number  of  days  on  which  the  Commission  has  sat 
is  no  criterion  of  its  usefulness.' 

The  Conmiission  is  critici.sed  on  account  of  its  expense. 
This  criticism  is,  however,  directed  only  to  a  slight  ex- 
tent against  its  cost  of  maintenance.^  It  is  the  expense 
of  obtaining  a  decision  that  the  critics  have  in  mind.  In 
recommending  a  limitation  of  the  right  of  appeal,  the 
committee  of  18.S2  intended  to  limit  expense.  By  pro- 
viding for  the  intervention  of  the  Board  of  Trade  in  vari- 
ous matters,  the  legislation  of  1888  hoped  that  the  ex- 
pen.se  of  proceedings  might  be  kept  down.  The  attempt 
of  the  legislation  of  1894  to  lessen  expense,  by  jjroviding 
that  costs  should  not  be  granted  by  the  Commission, 
cxcej)t  in  cases  where  the  claim  or  the  defence  is  frivo- 
lous or  vexatious,  was  intended  to  obviate  the  burden  of 
the  fees  of  the  railway  lawyers  falling  on  the  trader,  when 
defeated  in  a  case.  The  admittedly  high  expen.=;es  are 
not  attributable  to  the  fees  of  the  Coinmi.'^sion,  whici 
are  moderate,'  but  to  the  development  of  a  technically 
equipped  Kailway  Commission  Bar.  It  was  early  seen 
that  the  necessary  prominence  of  the  lawyers  employed 
would  make  the  process  relativ(>ly  expensive.  Th(>  same 
conditions   existed    in    comiection    with    the   Commission 

1  In  this  connection  !*ee  the  statement  of  .Sir  B.  .Samuelsoii,  wiio  wjis  very  active, 
on  the  trailers'  aide,  in  the  steps  Icailinu  up  to  the  leRislation  of  1,S88.  Hansard. 
188:t,  third  series,  vol.  278,  p.  1887. 

-  In  190.3  the  cost  of  maintenance  of  the  Commission  amounted  to  £(j.497. 

•■'Sic  Uadway  and  Canal  Commission  Procedure.  Schedule  III..  Woodfall, 
op.  cU.  See  also  Senate  Committee  on  Interstate  Commerce,  ut  supra,  vol.  v..  Appendix 
B,  p.  220.     The  Commission  fees  in  rate  cases.  a.s  a  maximum,  do  not  exceed  £5. 


^.'/■,'AL.'ir  ♦'. 


EXaUSn   HMLWAY   A\/,  (M.v.lA   fO.U.U/.S.sVO.V 


:{9 


of  187;}  In  the  luxly  of  hiwyors  fuund  practisiiig  hoforo 
the  Commission  arc  many  whose  names  are  prominent 
in  the  Parliamentary  bar,— a  prarticc  wiiose  fees  are 
high.  The  legal  work  before  tlie  Commission  lias  tended 
to  fall  into  the  liands  of  a  relatively  small  number  of 
practitioners.'  Prior  to  isy4  it  wi..,  the  practice  (o  allow 
costs  for  two  lawyers,  unices  when  some  especially  tech- 
nical matter  was  involved.^  Since  1S94  there  have  l)een. 
on  the  average,  two  lawyers  on  each  side  in  tiie  traders' 
cases.  Cnder  these  conditions  the  expen.se,  in  a  ease 
contested  before  the  Commi.ssion,  runs  from  £15<)  to  €200 
a  day.  The  individual  trader  is  able  to  le.^.sen  his  ex- 
pense where,  as  in  the  sidings'  rent  cases,  a  group  of 
tra<lers  bring  action  on  a  connnon  .s't  of  facts.  Only 
in  one  case  has  a  rate  matter  been  [jrc-^ented  before  the 
Commission  by  the  com|)lainant  himself;  and  he  was 
unsucce.s,'<ful.  The  judicial  members  of  the  Conunission 
are  opposed  to  the  complainants  apiiearing  in  person. 
Wiiih'  it  is  true  that  in  one  case,  wiiich  was  .settled  be- 
fore triai,  the  total  court  costs  to  the  complainant  were  £1; 
and  the,-<e,  with  his  other  expenses,  w<'re  reimbursed  to 
him  by  the  railway,  it  is  apparent  that  those  who  are 
aggrieved  in  small  matters  cannot  afford  to  come  before 
the  Commission.'  There  have  not  been  the  migratory 
.sessions  of  the  Conunission  which  the  traders  favor.  The 
s(>.ssions  are  held  in  the  capital  cities  of  the  countries  con- 
cerned.    It  is  cheaper  to  have  tlie  cases  taken  to  the  tech- 

'In  the  58  trailers' caws  covereil  by  the  reported  <leei><ions  down  to  1902.  tiH 
lawyers  look  part.  .\Ir.  .1.  H.  Balfour  Browne.  K.("..  who  is  the  ileau  of  the  trailers' 
legal  forces.  :ip|ieared  in  41  cases;  Mr.  (',  A.  Cripps.  m  .'if.;  Mr.  K.  Moon,  in  ril .  In  all 
there  were  :)-'  lawyers  who  appeared  in  more  than  three  ca.ses.  Kighl  of  these 
appeared  in  more  than  ten  ca.ses  each.  The  le.-iders  have  not  practised  exclusively 
on  one  side.  lor  exain|ile.  Mr.  C.  A.  Cripps.  wh  j  has  appeared  in  30  cases  for  the 
railways,  has  appeared  in  G  cases  on  the  traders'  side. 

'The  reuislrar  is  the  taxinn  officer  of  the  f  immission.  See  ap))eal  frmn  his 
decision  in  this  connection  in  (llamoruannhire  Ciiunln  (\mncd  v.  Ureiit  W—tirn 
liy.,  9  Hy.  and  Canal  Traffic  Cases.  1. 

'See  evidence  of  T.  Middleton  Ijeforc  the  Itoyal  I'oinmission  on  AEricultural 
Depression.  1897.  answer  to  question  2361. 


^^^n 


40 


QUARTERLY  JOURNAL  OF  ECOSOMICS 


nically  p(iuipprd  lawyers  in  the  capital  cities  than  to  have 
these  come  to  the  oases  in  local  centres.  If  the  case  in- 
volvesi^any  matter  of  consitlerable  moment,  the  contest 
has  to  be  carri.d  on  against  the  Railway  Association. 
This  being  so,  the  complaints  have  to  be  fought  out  by 
firms,  groups  of  traders,  trade  associations.  Chambers  of 
Commerce,  local  governing  bodies.'  The  cost  of  a  suit 
before  the  Commission  is,  under  these  conditions,  about 
the  same  as  before  any  other  high  court.' 

In  view  of  the  expense  attaching  to  suits  before  the 
Commission,  it  has  been  urged  that  tlie  power  possessed 
by  the  Board  of  Trade  under  the  Act  of  1S73  to  institute 
proceedings  before  the  Railway  Commission  should  be 
utilized.  While  the  railways  would  not  object  to  the 
Board  of  Trade  i)resenting  before  the  Commission  mat- 
ters arising  under  the  conciliation  procedure  of  the  Board, 
where  its  decisions  have  not  been  accepted  by  the 
railways,  it  has  been  held  that  this  would  interfere  with 
the  efficiency  of  the  conciliation  clau.se.  The  government 
has  held  that  to  make  a  government  department  public 
prosecutor  in  cases  before  the  Railway  Conunissio.i  would 
savor  rather  of  pensecution  than  of  prosecutio.i.'  One 
exception  has  been  made  to  this  general  rule.  In  1899 
the  Irish  Department  of  Agriculture  was  cmpowe.'ed 
in  its  act  of  organization  to  present  rate  grievances  before 
the  Commission  at  the  public  expense.  So  far  there  has 
been  only  one  sucl.  case,  in  1902.  In  this  the  Board  of 
Agriciilturc  was  successful. 

The  Associated  Chaml)ers  of  Commerce  urged  in  March, 

lOnoof  the  most  interejitinK  trude  associations  is  the  Mansion  House  Associa- 
tion. found^'J  in  1NS(».  It  representeil,  l)efore  the  Hoard  of  Tra<le  in  1880-90. 
209  public  and  local  authorities.  174  commercial  and  aiJTicultural  orsanizations. 
besides  a  lar^e  ntiniber  of  individuals. 

'While  the  limitatir)n  of  api)eal  reduces  the  expense,  the  powers  of  the  Court 
of  .\ppeal  to  grant  co«ts  in  Commission  cases  is  not  affected  bv  the  legislation  of 
1S94. 

'Hansard.  188,3,  third  aeries,  vol.  278,  p,  1901.  statement  of  Hon,  Joseph 
Chamberlain. 


r^H^ 


Exausn  RM/.n-AY  wn  c.wm.  co-./u/nn/ov      41 

1904,  that,  with  a  view  to  cheapness  and  oxjifMlition,  the 
local  county  courts  should  be  used  in  cases  between  tiie 
railways  md  the  traders.     This  -ureestion  is  esp..ci;dly 
intended  to  cover  the  case  of  the  stnail  trad.T.     In  „tie 
form  or  another  it  has  been  under  (iiscussion  since  the 
early    nineties.     (Uses    affecting    railways    already    come 
before  the  county  courts  from  time  to  time.'     While  the 
county  court  method  of  procedure  m..:ht  work  fairly  wr>ll 
in  local  matters,  it  is  apparent  that  thi.v  procedure 'is  un- 
fitted for  nuittera  of  more  general  interest.     There  would 
also  be  a  defect  in  that  the  way  is  open  for  a  lack  of  ex- 
pedition.    Appeals  may  be  taken  on  points  of  law  or  e(|uity 
from  the  decisions  of  the  county  court.     In  the  consider- 
ation of  these  appeals  the  high  courts  are  empowered  to 
draw  inferences  of  facts.     E.xceedingly  small  matters  are 
appealed  at  present.     In  1904  one  appeal  was  concerned 
with  an  alleged  overcharge  of  UW.  on  a  railway  journey.' 
It  has  been  suggested,  however,  that  the  cost  of  .-ppeals 
under  the  proposed  jmisdictjon  should,  where  the  appeal 
is  by  a  railway,  be  borne  by  the  railway.' 

When  the  Act  of  1S94  was  under  discu.ssion,  it  was 
claimed  that  the  legislation  was  <lefective,  in  that  it  had 
not  restored  the  right  posscs.sed  prior  to  ISSS  to  challenge 
the  reasonableness  of  all  rates.  To  the  proposition  to 
confer  rate-making  power  on  the  Commi  -ion  the  govern- 
ment was  .strf)ng]y  opposed.  It  considcn,!  that  "to  ask 
the  Railway  Commission,  or  any  tribunal,  to  consider  what 
is  a  reasonable  rate  would  be  to  give  them  no  firm  ground 
on  which  they  could  .-^tand."*     Back  of  all  the  criticism 

nfl^m^'-vr"  ""'""'  "'"''■'  '^"''"""  ^  "f  ">"  "'"'"■">■  'i"'-^  a-l  '•''••'r«-  Art 
of  ISUl.  lh,s  section  ,s  cnrerned  with  special  charge,  that  ...av  he  „.aae  hy  rail- 
ways for  special  services.  j  •»" 

^Athlon  V.  I.nrir.  it  Ynrkihire  liy..  2  K.  H.  1904.  31;). 
'Wajthora  and  Sleve-ig.  op.  oil.,  p.  65. 

<State„,ent  of  Hon.. lames  Bryce.  presi,|ent  of  the  Boanl  of  Trade,  in  an  in- 
terview with  the  deputation  on  railway  rates  and  charges,  June  1,5  1SH4  Rail- 
way  Time;  June  2,i,  1894. 


•Jli«.'.w.-J 


JJ  .-. 


42 


QVMiTKIH.y   .IOC Its M.   ilF   ICCOSOMICS 


tliroctcd  l)y  the  tradf-r  against  the  Conmiissioii  there  is  in 
reality  a  deniie  tliat  the  rate-making  power  sliould  he  ex- 
ereised.  Hut,  wliile  tlie  desire  exists,  there  is  a  laok  of 
unanimity  as  to  the  means  to  use  to  accomphsli  this.  In 
this  uncertainty  some  are  looking;  to  tlie  Hoanl  of  Trade. 
Tlie  Hoard  of  Trade  was  niveii  jurisihetion,  under  the 
Aet  of  ISSS,  to  deal  with  rate  prievances  tiirounh  a  eon- 
ciliation  i)roress  modi-lled  on  tliat  contained  in  the  .\ct 
to  ren'ilate  Commerce.  It  is  also  empowered  to  at- 
tempt to  .settle  complaints  about  unrea.sonable  rate.s. 
The  operation  of  the  iioard  of  Trade  under  its  conciliation 
jurisdiction  is  n  comiized  a.-  having  met  with  a  consid- 
erable d  •  of  success.'  Afireements  have  been  obtained 
in  about  one-tliinl  of  the  ca.ses  brouRht  before  it.  Hy 
the  explanations  it  obtains  from  the  railways  the  board 
is  also  able  to  settle  incipient  rate  prievaiices.  The  proc- 
ess is  simple  and  inexix-nsive.  When  a  complaint  is  mad", 
the  railway  is  communicated  \vi  '  so  that  a  statement 
of  its  position  may  be  obtained,  if  the  matter  cannot 
be  settled  by  correspondence,  an  attempt  is  ma<le  to  ar- 
range a  me(<tiiif;  at  the  Hoard  of  Trade  between  the  com- 
plainant and  a  railway  re|)resentative.  Here  the  matter 
is  taken  up  in  an  informal  manner.  Isolated  cases  have 
dragged  on  a  year  without  a  decision,  but  normally  some 
settlement  is  obtained  much  more  promptly.  Complaints 
varying  from  an  overcharge  of  '2(L  on  a  lawn-mower  to 
(pie.stions  concerned  with  preferential  rates  ccme  before 
the  board.  In  liMK)  it  was  a!)le  to  obtain  a  reduction  in 
di.stributive  rates  affecting  five  hundred  towns  in 
I'Jigland  and  in  Ireland.  Since  ISSS  over  eleven  hundred 
cases   have   been    brought    before  the   board."     Approxi- 

'  riiiM  in  luliiiitU'rl  l]y  sii  slriitiK  an  aiiviicjle  of  the  rnle-makinn  power  as  .Mr. 
W.  .\.  Hunter.  .See  an  artirle  of  his.  "  liailwuy  Kates  anil  the  Cominon  Weal," 
Xew  Krviru\  vol.  viii.  p.   i4!. 

-  Tliis  is  exclusive  of  over  1  .ftOO  unreasonable  rate  complaints  dealt  with  by 
a  special  oHiciai  prior  to  IK99. 


f:\(/l.isil  UMIM  \y  ,iv/>  ri\  I/,  roiM/.'.s.s/o.v       .|;{ 

iiiatcly  (.ri.'-half  of  fhcsc  were  pivsnitcl  w  the  |>.Ti.i(| 
IS!H>  I'K).').  Tlic  following  siiiiiiiiiiry  sIhiws  the  rrsult 
ol  till-  more  iniportiuil  appliciitions:  — 


Sevrntli  Hr|,.,rl.    j     Kiitlilh  l(..|>,,r(. 


HlilNcirii.  AfPllrATlova,   INflf)  HNI,I. 


ClnniiifioBtion       ... 

I)>'l»jH  in  rrinvpyanre.^,  riwilitir^a,  pto. 

Kiiiilliirs  ami  i.ilN  on  raniili 

Ital.'«,  ilifTpri'iiiittl 

UttI*"*.  |>reff>rcntjitl 

Kali"<,  Ihrniiirli  ruti'iiilihiirip.l  . 
Hull-.  ihi.iuKli  rat.'-,  reilurlion  .if 
Itiit.-".  nnriMi-..pii,.i(i|i.,  r.-.luriiipM.if 
ftphat*-.  rurtuKi. 
Mphalp.  »t8ti./!i  ipniiinnlM 


'  Splll.-.|.      ^  •"<"■• 


37 
0 
I 


.p-ful.     >*<-"M 


g 

4 

IN 


IH 
3 


[  ii'.iir- 
•p."(ul. 


4 

I 

L'tt 


Tliorc  well',  then,  iiiidcr  those  lica.lings  satisfactDpy  agn'o- 
riicnts  in  ahout  one-fifth  of  the  arjplirations  made. 

While  the  ronciliation  work  of  the  Hoard  of  Trade  lias 
iiif't  with  a  fair  degree  of  siiece.s.s  in  .<nialler  matters  it 
has  faih'd  when  hirger  iiiatter.<  have  iiad  to  Im-  (h-aU  with. 
In  I'lih'oek's  ease,  whieli  iaiei  came  to  tiie  Railway  Com- 
mi.ssion,  there  was  involved  the  right  of  the  eomplaiiiant 
to  receive  rel:  n  respect  of  terminal  services  not  per- 

formed at  his  siding.s.  The  matter  dragged  on  for  .s.-veii- 
teeii  months,  and  finally  the  tailways  stated  they  would 
take  the  matter  to  the  ('ommis,sioii,  although  in  tlie  opin- 
ion of  the  Hoard  of  Trade  the  ''matter  was  of  no  such 
intricacy  or  difficulty  as  to  make  the  arbitrament  of  a 
more  elaborate  tribunal  essential  to  a  just  decision,"' 
The  railways  will  not  recognize  the  conciliation  proc-dure 
in  any  matter  which  involves  legal  right.  With  a  view 
to  simplifying  procedure  the  Act  of  ISSS  provides  riiat, 
when  a  trader  desires  to  obtain  a  through  rate,  a  prelim- 

>  Fourth  liepurl  of  Ihr    -tonrd  nf    Trrule   o/   Procmt,,^,   under   .Stcl.vn   31    of  th, 
ICaUwau  and  (  aiml  Tniili    Act,  1S88    p.  U. 


44 


QUARTERLY  JOURSAL   OF  ECOSOMICS 


inary  hoaring  Iw'fon'  t\w  Hoard  of  Trailo  is  noccssary. 
Howovcr,  siiipc  the  (Ictcrtiiiiiatioii  of  tlu'  Hoard  on  such 
a  matter  has  no  IcRal  cffoct,  the  proliininary  hearing  has 
become  simply  a  perfunctory  matter.  The  Hoard  of 
Trade  is  unwilling  to  exj)re!*s  an  opinion;  while  the  rail- 
ways are  unwilling  to  take  any  position  that  may  he  used 
against   them  liefore  the  Commission. 

When  tlie  rate  increases  of  lS%\  were  under  discrssion, 
the  Mansion  House  Association  proposed,  on  hehalf  of 
the  trailers,  to  accept  the  decision  of  the  lioard  of  Trade 
on  these  rates  if  the  railways  would  also  pledge  themselves 
to  accept  the  decision.  Hut  to  this  the  railways  would 
not  agree.  To  the  attempt  to  give  the  Hoard  of  Trade 
power  over  rates  the  railways  are  strongly  o|)posed. 
This  position  is  also  supported  by  the  Hoard  of  Trade 
itself.  It  has  constantly  claiiiicil  that  the  strength  of 
the  conciliation  procedure  of  the  board  is  wholly  attribu- 
table to  lack  of  compelli'ig  power.  It  is  averse  to  any  in- 
creased jurisdiction  over  rates  being  conferred  upon  it. 
It  also  believes  that,  if  a  new  rate  tribunal  is  organized, 
it  should,  while  e(|uipped  with  a  conunanding  personnel, 
be  of  the  "advisory"  ty|)e. 


VI. 

Table  I.  indicates  Tiat,  from  the  traders'  standpoint,  the 
most  important  matters  brought  before  the  Commission 
arc  sidings'  rent  charges,  preference,  unreasoniil)le  rates, 
charges  for  .services  at  sidings,  and  rea.sonablc  facilities. 
Attention  has  already  been  directed  to  the  importance  of 
sidings'  traffic  in  British  railway  working.  For  many 
years  the  small  traders  engaged  in  retailing  coal  had  been 
using  the  trucks  as  storage  warehouses.  The  railways 
objected  to  their  sidings  being  crowded  with  loaded  trucks. 
The  colliery  owners,  to  whom  the  rolling  stock  belonged, 


i:\af.tSll   KM /.WAY   AM)  r.l.Y.I/.   r()\fMlSSIf)\         45 

also  (ihjccted.  FornuTly  tlir  railways  had  charKiMl  df- 
niiirrap-  charges  imw.l  on  ihc  avt-rap-  iitiic  a  truck  was 
(liiaiiicd  on  a  siding.  In  iS'.J.j  the  railways  dccidcl  to 
charKc  dornurrago  base!  on  the  actual  tiinc  a  truck  was 
detained  on  a  siding  over  anil  above  tl,,.  (j„„.  n.'ces>ary  to 
unload  it.  Since  l.SUr)  many  application-  dealing  with 
this  arrangement  have  been  brought  hetore  the  Cmimis- 
sion.  Some  have  come  tip  under  the  heading  of  legality 
<H  rates,  others  imder  the  heading  of  unreasonable  rates. 
The  complaints  ,t,  regard  to  charges  for  .services  at  sidings 
are  attributable  to  the  fact,  already  sufficiently  exj)lained, 
that  in  the  Knglish  railway  system  there  are  various 
.special  charges  over  and  above  the  convevance  rate. 
As  is  indicated  in  Table  I.,  779  applications"  have  been 
made  to  the  Commission. 

The  preventive  effect  of  the  Conunission  is  in  part 
measured  by  tlu'  details  given  in  Table  II.  A  .-special  ex- 
ample will  make  the  preventive  efTect  clearer.  In  l'K)2 
some  forty-.seven  cases,  which  were  brought  before  the 
r<.mmissi(,n  alleging  that  the  Midland  Railway  was  unduly 
preferring  a  prominent  colliery,  such  fa\or  l)eing  to  the 
detriment  of  the  complainants,  were  settled  before  trial. 
In  all,  21U  cases  have  been  settled  or  withdrawn.  Formal 
action  has  been  taken  in  MG  applications,'  leaving  af.prox- 
imately  ono-third  of  the  applications  concerning  which 
there  is  no  further  record. 

There  have  been  only  three  ca.ses  in  the  history  of  the 
Commission  in  which  anything  savoring  of  a  secret  rebate 
has  l)een  brought  before  it.  The  work  of  the  Commission, 
in  so  far  as  rates  are  concerned,  has  been  almost  entirely 
concerned  with  freight  traffic.  The  Act  of  1SS.S  makes  no 
direct  provision  for  action  in  regard  to  passenger  rates. 

'This  includes  a  larKo  numt)er  of  Kn.up  .ientioii-;  ,.e..  wlien-  one  decision 
covers  identical  facts  in  a  set  of  caies,  consent  deci.-ions,  raw,  where  a  -fltl.-n.pnt 
arrived  at  by  the  partie.  i.  cnbodied  in  an  order  of  the  Con„„„„on.  .iismissal  of 
applications,  etc. 


46 


QUARTERLY  JuVRNAL   OF   ECOXOMICS 


m 


It  has,  however,  been  settled  in  decisions  arising  out  of 
the  Conimissio.rs  action  that  it  has,  as  an  incident  of  a 
through  rate  arrangement,  power  to  order  through  booi<- 
ing  (ticketing)  of  passengers.  It  has  also  power  to  deal 
with  passenger  facilities  under  the  (juestion  of  "reason- 
able facilities."  Of  the  rate  cases  formally  argued  before 
the  Conmiission  the  traders  have  won  not  far  from  three- 
fifths.  The  tendency  of  the  Commission  has  been  to 
give  compromise  decisions.  Not  only  have  there  been 
compromises  as  between  the  contending  parties,  there  have 
been  compromises  as  between  the  opinions  of  the  com- 
missioners themselves.  In  the  Hickett,  Smith  case,  in 
which  the  point  involved  was  an  increase  in  rates,  Justice 
Collins  thought  all  the  increase  was  justifiable,  Lord  Cob- 
ham  thought  none  of  the  increase  was  justifiable.  Sir 
Frederick  Peel  occupied  an  intermediate  position,  and  his 
opinion  prevailed.  Both  in  the  traders'  cases  and  in  the 
cases  between  railways  the  Commission  has  been  attempt- 
ing to  have  the  parties  arrive  at  satisfactory  .settlements, 
without  final  action  on  its  part.  In  some  cases,  when  the 
parties  have  agreed,  the  Commission,  in  accepting  the 
agreement,  has  incorporated  it  in  its  final  order. 

The  presence  of  a  judge  on  the  Commission  has  meant 
a  strict  constructionist  point  of  view  in  regard  to  the  law. 
In  general,  power.**  have  not  been  implied.  Early  in  the 
hi.'^tory  of  the  Commission  Justice  Wills  .said  nothing  could 
be  more  mischievous  than  to  strain  legislation  to  cover 
facts  that  had  been  left  out  of  it.  In  1S92  the  same 
judge,  in  speaking  of  a  statute,  said,  "The  legislatiwe  had 
reasons  of  its  own,  good,  bad,  or  indifferent,  which  have 
nothing  to  do  with  me."  In  (me  ca.se,  however,  where 
a  railway  had  closed  a  branch  railway,  and  pulled  down 
the  railway  station,  the  Conmiission  re(iuired,  with  nuich 
hesitation  on  the  i)art  of  the  judicial  member,  that  the 
railway  should  give   the   reasonable  facilities  asked  for; 


Exausn  RAILWAY  Asn  CAXAL  co^r^nssl(>^      47 

and  tliis  of  neeossity  involved  the  rebuilding  of  the  rail- 
way station.  This  implication  from  the  law  of  1S.54  was 
promptly  overruled.' 

Undoubtedly  the  pre.sence  of  a  judge  on  the  Commission 
has  made  the  relations  with  the  higher  courts  more  har- 
monious than  was  the  case  with  the  Commission  of  1873. 
There  has  not  been  that  tendency,  so  conspicuous  in  the 
relations  of  the  federal  courts  to  the  Interstate  Commerce 
Commission,  to  regard  the  Conmiission  as  an  amorphous 
interloper.  In  one  case,  it  is  true,  the  Scotch  Court  of 
Sessions  claimed  that,  if  a  decision  as  to  fact  depended 
upon  a  conclusion  in  law,  then  there  could  be  an  appeal. 
This  line  of  argument,  wliich,  if  followed,  would  soon 
undermine  the  finality  of  the  Commission's  decisions  on 
questions  of  fact,  has  not  been  adopted;  and  there  has 
been  a  ready  recognition  by  the  courts  of  the  finality  of 
the  Conmiission's  decisions  on  ({uestions  of  fact.  The 
result  of  this  is  seen  in  the  attitude  of  the  courts  to  the 
decisions  of  the  Comnii.'^sion.  Down  to  1904  there  have 
been,  as  is  indicated  in  Table  III.,  thirty-eight  appeals. 
The  Connni.ssion  has  been  overruled  in  four  ca.ses,  while 
in  two  others  it  has  been  sustained  in  part  and  reversed 
in  part.  The  decisions  of  the  Conuni.ssion  in  the  traders' 
cases  have  more  finality  than  in  the  cases  between  rail- 
ways. While  nine-tenths  of  the  applications  before  the 
Conuni.ssion  have  been  concerned  with  traders'  rights, 
there  have  been  only  eighteen  ajjpeals  in  the  traders' 
cases;  wiiile  there  have  been  fifteen  ap[)eals  in  cases  wiiere 
railways  alone  or  railways  and  dock  companies  have  l,een 
concerned. 

From  the  .standjioint  of  the  trader  a  ([uestion  of  impor- 
tance is  the  willingness  of  the  railway  to  obey  tlie  orders 
of  the  Comnii.^sion  witiiout  fighting  tiie  matter  to  the  la.st 
ditcii.     While,  on  the  whole,  the  railw..;s  have  l)een  loval 


1  Dartntlnn  Lonil  Hnnrd  v.  /..  it-  .V.  IT.  Uij.    K  Hy.  ami  Cunal  Traffic  Cn 


.  2!6. 


48 


QUARTERLY  JOURNAL  OF  ECONOMICS 


Kl-J 


to  the  decisions  of  the  Commission,  examples  may  be  found 
on  both  sides.     In  1902  the  railway  reconsidered  its  first 
intention  to  appeal  the  Charrington,  Sells  case.    The  re- 
sult was  that  a  large  number  of  cases,  in  which  the  same 
set  of  facts  was  involved,  were  settled  out  of  court.    The 
London  &  North-western,  as  a  result  of  the  decision  in  the 
first  Corn  Traders'  case,  gave  up  the  attempt  to  com- 
pete for  the  traffic    with  which  the  case  was  concerned, 
and  readjusted  its  rates  accordingly.     On  the  other  hand, 
it  was  necessary,  in  the  case  which  the  Mansion  House 
Association  won  from  the  same  railway  in  1896,  to  have 
supplementary    proceedings    before    the    Commission    in 
1897  before  the  cessation  of  some  of  the  rates  complained 
of  was  obtained.    The  involved  uncertainties  of  English 
railway  law  have  also  played  their  part.    The  railways 
have  been  able,  acting  within  the  law,  but  depending  upon 
legal,  not  commercial,  conditions,  to  modify  the  redress 
given  by  the  Commission.    In  1889  a  decision,  under  the 
undue  preference  clause,  found  that  existing  rates  were 
interfering  with  the  distributive  business  of   the  Irish 
town  of  Newry.    Two  years  later  complaint  was  made 
because  one  of  the  rates  complained  of  had  been  raised. 
The  railway  successfully  justified  this,  on  the  ground  that 
the  section  of  road,  on  which  there  was  an  increase  of  rate, 
was  expensive  to  work  on  account  of  cost  of  gradients,  etc. 
In  1900  the  firm  of  Cowan  &  Sons,  paper  manufacturers, 
failed  in  an  application  to  the  Commission  for  a  rebate 
on  sidings'  charges.     In  retaliation  for  this  application 
the  railway  company,  which  for  twenty-eight  years  had 
delivered  coal  at  the  private  siding  of  the  firm  in  question, 
refused  any  longer  to  deliver  coal  at  the  siding.    While 
the  railway  was  at  the  same  time  delivering  coal  at  the 
sidings  of  adjacent  competing  firms,  it  delivered  the  coal 
for  the  Cowans  at  a  near-by  station,  and  they  had  to  haul 
it  back  to  their  siding.    The  decision  of  the  Commission 


"'.-■'(ffi^*"'  ■ 


'maL:?^^- 


ENGLISH  RAILWAY  AXD  CANAL  COMMlSfHON        49 

in  favor  of  the  Cowans  was  overruled.  It  was  held  that 
the  arrangement  between  the  railway  and  the  trader  in 
this  case  was  a  purely  voluntary  arrangement,  creating 
no  prescriptive  rights  against  the  railway.  It  was  not 
till  1904  that  legislation,  bringing  such  si(ling.s  within  the 
facilities  clause  of  the  Act  of  1854,  and  thus  supporting 
the  Commission's  decision,  was  passed. 

The    Commission,   whenever    there   is  an         u  ^v  of 
facts,— e.g.,  in  many  of  the  sidings'  rent  cases,  'alt 

with  cases  in  groups  giving  a  decision  which  ^(.  a 

set  of  cases.  The  unwillingness  of  the  courts  to  give 
the  tlecisions  of  the  Commission  a  more  general  effect  has 
assisted  in  tying  the  decisions  down  to  the  facts  of  a  par- 
ticular case.  In  October,  1901,  the  Conunission  decided 
that  certain  coal  rates  charged  by  a  number  of  Scotch 
railways  were  unreasonable.  The  rates  were  discon- 
tinued, as  regards  the  complainants,  in  December  of  that 
year.  Three  other  traders,  who  were  subjected  to  the 
same  rates,  but  who  had  not  been  parties  to  the  suit, 
later  brought  action  in  the  courts  for  damages  because 
the  railways  had  continued  to  charge  them  the  rates  com- 
plained of.  The  court  held,  however,  that  the  decision 
of  the  Commission  had  no  general  effect.  Although  the 
rates  had  been  found  unreasonable,  the  court  would  take 
no  cognizance  of  this  unless  they  were  also  illegal.' 

The  functions  committed  to  the  Commission  are  ex- 
tremely diverse.  AVhile  it  has,  with  evident  innuendo, 
been  called  the  Traders'  Court,  it  has,  in  adilition  to  deal- 
ing with  rate  matters,  an  extensive  jurisdiction  in  regard 
to  arbitration  of  matters  referred  to  it  by  the  Board  of 
Trade;  e.g.,  differences  between  railways  involving  such 
matters  as  running  rights,  number  of  trains  under  a  run- 
ning arrangement,    arrangements    in    regard    to    connec- 

l  Lnnarktkire  .Slerl  Co.,  Lid.  v.  Cnlediyntan  Hu.W  Scoti  Law  Tirnc-i  Hpptirtn, 
407.  40S.  A  prelimiimry  decision  of  the  court  ha.l  hi-M  Ihat  the  Coiiimission's 
decision  was  of  geni-ral  effect.     Ibid.  225. 


60 


QUARTERLY  JOURNAL  OF  ECONOMICS 


tion  in  a  through  train  service  over  a  connecting  line, 
division  of  expenses  between  the  owning  and  the  controlling 
company,  differences  between  the  Postmaster-General 
and  railways  in  regard  to  postal  payments,  questions 
arising  in  connection  with  the  introduction  of  improved 
brakes,  complaints  in  regard  to  the  water  supply  of 
London.  In  addition  it  serves  as  a  court  of  appeal  from 
the  Board  of  Trade  in  cases  arising  out  of  the  rules  made 
by  the  Board  of  Trade  under  the  railway  labor  acts,  and 
has  alternative  jurisdiction  in  the  workmen's  trains  ap- 
plications. In  addition  to  jurisdiction  under  special  acts 
the  Commission  exercises  functions  finding  their  legal 
sanction  in  some  nineteen  general  acts. 

Not  only  are  there  complaints  at  present  in  regard  to 
preferences  on  imported  products,  there  are  also  com- 
plaints concerning  the  rates  and  facilities  given  home 
products.  Complaint  is  especially  active  in  the  case  of 
Irish  agricultuf '  products.  Comparisons,  unfavorable 
to  domestic  rate,  are  constantly  being  made  with  for- 
eign rates.  TIiU  question  of  shipments  on  "owner's  risk" 
rates  gives  rise  to  many  complaints.  The  criticism  of 
the  Commission  on  Agriculture  of  1897,  that  the  rate 
regulative  legislation  has  not  given  clear  effect  "to  the 
intentions  of  Parliament,'"  is  general  among  the  traders. 
That  the  Commission  has  not  accomplished  much  that 
was  expected  of  it  is  a  patent  fact.  Its  procedure  has 
not  met  the  case  of  the  small  trader.  At  the  same  time 
the  rate  regu'  ive  procedure  that  accomplishes  all  that 
is  expected  of  it  is  not  absent  from  England  alone.  The 
Commission,  it  must  be  remembered,  was  organized, 
not  to  reduce  rates  or  to  intervene  actively  in  matters 
of  rate  regulation,  but  as  a  court  to  settle  differences. 
As  a  court,  it  has  performed  its  functions.  While  there 
was,  at  the  outset,  some  tendency  on  the  part  of  the  judi- 

1  final  Report,  paragraph  526. 


Is^f^JT^ST^^ST 


'9m 


^'.^m  M^  Jbj-"'iui. 


>*l?"t:;i  '^i..»SSi«'3iM''     ^^ 


ESGLISU  RAILWAY   ASD  CASAL  COMMISSIOS         51 

cial  members  to  look  at  matters  from  a  legal  staiuipoint 
rather  than  from  the  standpoint  of  facts,  the  tendency 
has  been,  in  more  recent  years,  to  meet  the  conditions 
rather  than  to  bend  the  conditions  to  meet  preconceived 
theories.  On  questions  of  railway  law  the  Conunission 
has  been,  on  the  whole,  more  in  touch  with  the  facts  than 
the  ordinary  law  courts.  While  the  expense  attaching 
to  litigation  before  the  Commission  is  readily  apparent, 
it  may  be  queried  in  how  far  there  is  a  justification 
for  expecting  either  a  cheap  settlement  or  a  settlement, 
at  the  public  expense,  of  important  business  matters. 
So  far  as  England  is  concerned,  the  attempts  to  obtain 
cheap  settlements,  in  the  face  of  the  existing  involved 
body  of  railway  law,  would  mean,  if  successful,  results  of 
little  worth. 

VII. 

In  the  United  States  the  Federal  courts  have  recog- 
nized the  debt  of  the  Act  to  regulate  Commerce  to  the 
Engli.sh  regulative  legislation.  But,  when  comparison 
is  made  of  the  constitution  and  functions  of  the  English 
Commission  with  those  of  the  Interstate  Commission, 
differences  at  once  appear. 

The  English  Commission  is  a  court.  The  American 
Commission  has  the  functions  of  a  referee  or  special  com- 
missioner. The  former  has  final  decision  in  regard  to 
fact  and  a  limitation  on  the  right  of  appeal,  with  the  re- 
sult that  appealed  cases  are  normally  settled  within  a 
year.  The  latter  has  no  finality  of  decision  in  regard  to 
fact,  and  appeals  from  its  decisions  have  taken  from  two 
to  nine  years  to  decide.  While  the  English  Commission 
has  been  overruled  in  the  period  ending  1904,  wholly 
or  partly,  in  six  out  of  thirty-eight  appeals,  the  Ameri- 
can Commission  has,  in  approximately  the  same  period, 
been     overruled    in    twenty-nine     out    of    thirty-eight 


-fJ*i...c*> 


52 


QUARTERLY  JOURNAL   OF  ECOSOMICS 


appeals.'  While  the  Interstate  Commerce  Commission 
has,  practically  from  the  outset,  claimed,  as  a  necessary 
implication  from  the  language  of  its  enabling  statute, 
an  amendatory  rate-making  power,  the  English  Com- 
mission, organized  as  a  court,  has,  almost  without  excep- 
tion, kept  aloof  from  making  implications  extending  its 
jurisdiction,  and  has  denic  any  intention  to  exercise 
a  rate-making  power.  While  the  members  of  the  Ameri- 
can Commission  hold  on  a  limited  tenure  and  the  Com- 
mission is  a  bi-partisan  organization,  the  tenure  of  the  lay 
commissioners  in  the  English  Conunission  is  for  good 
conduct,  there  is  a  pension  on  retirement,  no  question 
f  bi-partisan  organization  enters  in,  and  the  provision 
is  made  that  one  of  the  commissioners  shall  have  techni- 
cal knowledge  of  railway  affairs.  The  judicial  members 
of  the  English  Commission  are  assigned  to  it  for  five  years; 
but  during  the  period  they  are  not  engaged  in  the  Com- 
mission work  they  perform  their  regular  duties  as  judges 
of  the  high  court. 

In  the  details  of  the  regulative  policy  which  has  devel- 
oped under  the  Commissions,  resembl.i nces  and  differences 
appear.'  The  English  regulative  policy  is  not  in  harmony 
with  that  of  the  United  States  in  regard  to  the  extent  to 
which  competition  is  to  be  considered  as  a  justification  of 
rate  anomalies.  While  the  English  legislation  eliminates 
competition  in  the  case  of  import  rates,  the  American 
position,  as  established  in  the  Import  Ratr  .^se,  states  that 
competition  is  to  be  considered  as  affecting  both  import 
rates  and  domestic  rates.  In  the  case  of  domestic  rates 
the  English  Commission  at  first  would  not  recognize  com- 
petition as.  the  justification  of  anj  anomalously  low  rate- 
basis  unless  a  well-defined  "public  interest"  was  thereby 

»Soe  Table  III.  See  al»o  Appeiulix  D,  p.  3.31,  vol.  v..  Heanngt  of  CommiUe4 
on  Interatate  Commerce,  etc.,  1905. 

'There  is  no  recognition,  in  the  workinR  of  the  English  Commission,  of  re- 
sults arrived  at  iri  the  regulative  policy  of  the  United  States. 


-^      .  r  jTf  fapn£^i«f:.rjQnriE:;^m<fl^iiue^]riiPB2 


ESaUSn  RAILWAY  AND  CASAL  COMMISSION        53 

served.  Later  it  accepted  the  same  view  as  was  set  forth 
in  the  United  States  in  the  Alabama  Midland  case; 
namely,  that  competition  is  one  of  the  matters  which  may 
lawfully  be  considered  in  making  rates.  The  grievance 
of  secret  rebates,  one  of  the  central  evils  in  the  United 
iStates,  is  practically  non-existent  in  England.  There 
is  no  provision  other  than  that  of  the  undue  preference 
clause  to  cover  such  a  grievance.  In  both  countries  the 
principle  that  undue  preference  is  a  question  of  fact  has 
been  accepted.  While  the  United  States  has  singled  out 
a  particular  form  of  preference  for  special  treatment 
under  the  "long  and  short  haul"  clause,  England  has 
allowed  more  elasticity  by  placing  the  matter  under  a 
general  clause.  On  the  question  of  the  justifiability  of 
granting  whole.sale  rates  in  respect  of  quantities  larger 
than  carload  lot.^  the  American  decisions  have  been  con- 
tradictory. The  lower  courts  have  shown  a  tendency 
to  accept  the  decision  in  Nicliolson's  case,  but  in  the 
Party  Hate  case  the  Supreme  Court  established  as  the  law 
that  a  discrimination  in  respect  of  quantity,  even  if  al- 
lowed to  all  doing  the  .same  amount  of  business,  is  to  be 
considered  from  the  standpoint  of  public  policy  and  the 
effect  of  such  an  arrangement  upon  trade  competition.' 
In  so  deciding  there  has  been  accepted  as  a  principle 
what  is,  so  far,  only  a  tendency  in  the  English  regulative 
policy. 

The  dissimilarities  of  the  matters  dealt  with  by  the  two 
Commissions  will  be  seen  by  referring  toTuble  I.  The  i  -ms 
common  to  the  two  Conmiissions  are  legality  of  rates, 
unreasonable  rates,  reasonable  facilities,  and  undue  pref- 
erence.=     In  all,  about  one-half  of  the  applications  made 

'/.  C.  C.  V.  Haltimare  <«■  Ohin  Rd.  Co..  14S  U.  S.  263.  This  uphcltlt.  the  (jen- 
eral  position  taken  at  an  earlier  linie  by  the  Interstate  Commerce  Commission  in 
Providence  Coat  (a.  v.  Prmudruce  &  Wurceiter  It.  Cu..  1  I.  C.  C.  IJeoisions,  3t)H. 
See  also  Juilson,  The  Law  of  Inlerttate  Commerce  aiut  itt  Fedfral  lleaulalwn.  p.  194. 

2  I  omit  sidings'  rent  (ilemurrane)  charges,  liecause  the  conditions  under  which 
these  arise  in  Kneiand  differ  entireh'  friin:  tho^a-  nxi.-.rinff  m  t.hr  I'nited  StRtes. 


/. 


54 


QUARTERLY  JOURSAL  OF  ECOSOMICS 


to  the  English  Commission  are  concerned  with  matters 
of  a  kind  coming  before  the  American  Commission. 

The  English  Commission  has  used  two  sets  of  rate  prin- 
ciple'^:  competition  as  an  important  factor  in  differential 
rates,  export  rates,  and  in  general  in  the  home  siile  of 
undue  preference;  cost  of  service  in  regard  to  preferential 
rates,  and  unreasonable  rates.  This  has  been  in  great 
degree  attributable  to  the  legislation.  The  traders  have 
desired  free  trade  in  exports,  not  in  imports.  Admitting 
that  there  has  been  a  certain  judicial  bias  in  favor  of  the 
cost  of  service  principle,  it  is  at  the  ime  time  apparent 
that  legislation,  like  that  of  1894,  which  makes  a  past  rate 
the  prima  facie  criterion  of  reasonableness  rules  out  the 
possibility  of  considering  present  competition.  The  de- 
fects of  the  legislation  of  1894  are  its  own.  The  Commis- 
sion has  made  the  legislation  less  unworkable  than  could 
have  been  expected. 

A  considerable  part  of  the  desire  to  control  and  lower 
actual  rates  in  England  pertains  to  that  hysterical  belief 
in  England's  industrial  decadence  which  has  found  some 
favor  in  recent  years.  A  considerable  part  of  tlie  criticism 
ari.ses  from  the  endeavor  to  prove,  on  the  basis  of  foreign 
statistics  not  property  comparable  with  English  statis- 
tics, that  English  rates  are  unduly  high.  Some  rearrange- 
ments in  the  Commission's  machinery  would,  however, 
effect  improvements.  An  arrangement  whereby,  when 
a  question  of  principle  is  established  in  a  decision  of  the 
Commission  as  distinct  from  a  mere  finding  on  facts,  the 
enforcement  should  l)e  placed  in  the  hands  of  the  Board 
of  Trade  instead  of  leaving  it  as  a  question  of  possible  dis- 
pute to  be  fought  out  in  individual  cases,  would  effect  an 
improvement.  A  closer  articulation  of  the  conciliation 
procedure  of  the  Board  of  Trade  with  the  process  of  the 
Commission,  whereby  the  finciuigs  of  the  former  would 
have  a  status  before  the  latter,  would  also  be  expedient. 


iP^Pili! 


EXOLlSll    RA/UVAY   A\D   CWAL   CO.V.U/.S.S/O.V 


55 


The  Commission  is  becoming  more  and  more  a  technical 
court,  whose  decisions  are  modified  by  an  attempt  to 
obtain  settlements  rather  than  legal  decisions.  Xot- 
withstandiiig  the  criticism  directed  against  it,  it  is  diffi- 
cult to  see  how,  considering  the  peculiar  geographical, 
industrial,  and  railway  conditions  it  has  faced,  the  Com- 
mission could  have  accomplished  more  than  it  has  ilone. 


Lkland  Stanford  Jr.  University. 


S.  J.  McLe.\.v. 


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